What Is a Simple Partnership?
The simple partnership is a contractual relationship between two or more persons (natural or legal persons), pursuing a common goal with common efforts or means (Art. 530 para. 1 CO), but without operating a business in accordance with the Swiss Code of Obligations.
The société simple is therefore a contract, not a legal entity or company in its own right.
Legal basis of the simple partnership
The provisions relating to simple partnerships are governed by the articles 530-551 of the Swiss Code of Obligations. It differs from other forms of company in that it has no legal personality of its own, which means that each partner is personally liable for the company's commitments (art. 544 CO).
Each partner must contribute contributionThe company's assets, whether money, property, claims or labor, and profits and losses are shared equally, unless otherwise agreed (art. 531 and 533 CO). The management can be made by all associates, unless specifically stipulated otherwise in the contract (art. 535 CO), and any decision requiring a unanimous vote is subject to the approval of the Board of Directors. unanimous consentUnless a majority has been agreed (art. 534 CO).
Common Use
In the business world, simple companies are often used, for example, for joint ventures or consortia in the construction sector, where several parties decide to pool their resources or skills to achieve a goal. In all cases, it is most suitable for temporary projects than for building a company for the long term.
Advantages of a Simple Partnership
The simple partnership offers a number of advantages, including flexibility and speed of creation.
Flexibility
The simple partnership can, to a fairly large extent, be adapted by the specific needs of the associates. If they do not opt for specific rules, the provisions of articles 530 to 551 of the Swiss Code of Obligations apply.
By default, all associates have the right to manage the company (art. 535 CO), but they may agree to delegate management to one or more of them, or even to a third party. This flexibility allows management to be adapted to the company's needs.
The partners are free define the terms of management, profit and loss sharing, and operating conditions in the partnership agreement. For example, they may agree that certain partners will not share in losses (art. 533 CO), or that contributions will not be equal (art. 531 CO).
Easy to install
Unlike a public limited company or LLC, the creation of a simple partnership is a relatively simple process (in part, because it's only a contract, not a business venture.)
All that's needed is for the founders to agree to jointly pursue an objective requiring common efforts or resources. Unlike more complex structures such as Sàrl or SAThe formation of a simple partnership does not require registration in the Commercial Register or a minimum share capital. A simple agreement between the parties is sufficient, although a written contract is strongly recommended.
Disadvantages of a Simple Partnership
Although a simple company is relatively straightforward to set up, it also has a number of disadvantages that need to be taken into account.
Liability
Individual associates (considered to be entrepreneurs) are liable for unlimited and united of the company's assets and liabilities. Although this form of company is flexible, it also has a number of drawbacks. risk for the partners, as they are jointly and severally liable for the company's debts (art. 544 CO).
In addition, a simple partnership may not enter into contractual relations with third parties, assume rights or assume responsibilitiesor own assets.
Unequal Sharing
In a simple partnershipby default, the sharing of profits and losses is equal between associates, regardless of the nature or value of their contributions, in accordance with article 533 of the Code of Obligations. However, the law allows for a high degree of contractual flexibility: associates may agree to a unequal distribution if so stipulated in the partnership agreement.
Thus, if the partnership contract specifies a different distribution of profits and losses (based on contributions or other criteria), this unequal sharing is perfectly acceptable. legal and valid. If an agreement provides only for the distribution of profits or losses, this distribution is deemed to apply to both cases, unless contrary agreement.
Dissolution of a Simple Partnership
A simple partnership entered into for an indefinite term may be terminated by any of the partners, subject to six months' notice (art. 546 para. 1 CO).
Causes of dissolution
Art. 545 of the Swiss Code of Obligations governs the cases in which a simple partnership may be dissolved:
- Achievement or impossibility of goal
- Expiry of agreed term
- Death of a partner
- Will of the partners
- Bankruptcy of a partner
- Just motives
Dissolution procedure
Once the dissolve Each partner must be informed of the decision to dissolve the company. In the event of dissolution due to death, bankruptcy or execution, the other partners must be informed. After dissolution, the partners liquidate the company's assets and liabilities.
The partners must manage the day-to-day business of the company during the period of liquidation. In the event of a partner's death, his or her heirs must temporarily continue the management of the business, while respecting the rules of good faith.
Should I Set Up a Simple Partnership?
It all depends on your objectives and those of your partners. Before making a choice, it's essential to find out everything you need to know. legal forms of enterprise in Switzerland. Sometimes, other forms of business (especially those involving limited liability) may be better suited to your objectives.
Frequently asked questions about simple partnerships
How to set up a simple company in Switzerland?
For set up a company simple in Switzerland, you'll need to follow the steps below:
- Setting a common goal: You and your partners must agree on a common goal to pursue.
- Written agreement: Although strongly recommended, a written agreement between the partners is not necessary for the creation of a simple partnership, but will be very useful.
- Start of activity: Once you've completed the above steps, you can easily get started.
Setting up a simple company is a relatively straightforward process. This is partly due to the fact that it is only a contract, not a business venture.
What's the difference between an SnC and a simple partnership?
The main difference between a SnC (General partnership) and a simple partnership in Switzerland is as follows:
SnC (General partnership) The SnC is a company in which all partners have unlimited joint and several liability for the company's debts. It is often used for small businesses or craft activities.
Simple partnership The simple partnership: It has no legal personality and is often used for temporary joint ventures or specific projects. Partners are also liable for debts (on an individual basis), but the simple partnership is less formal in terms of structure and regulation, as it can be modulated according to the needs of the partners.
What's the difference between a simple partnership and a sole proprietorship?
Simple partnership A partnership is a contract between two or more individuals or legal entities who pool their resources or activities for a common purpose. Partners are jointly and severally liable for the company's debts.
Sole proprietorship : L'sole proprietorship is run by a single person, who is fully liable for all the company's debts using all his or her assets. If a sole proprietorship's sales exceed a certain threshold, it must be registered with the Commercial Register.
Is a simple partnership considered a business?
No, under Swiss law, a simple partnership is not considered a company in the strict sense of the term. It is a contract, and therefore governed by contract law.
