Knowledge

The benefits of a Swiss joint venture

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When two or more companies join forces to form a joint venture, they set up a so-called joint venture - a joint venture in which each of the companies involved contributes with capital. To be successful as an entrepreneur with your company, a merger can be worthwhile for strategic, competitive and internal reasons.

Capital and risk participation

If there are a capital and risk participation of the founding companies and joint management functions are performed, this is referred to as an equity joint venture. The capital participation of the individual partners is usually the same. To be distinguished from this is the contractual joint Venture. In this variant, there is no joint venture, but only a contractually secured cooperation, which regulates the profit, cost and risk sharing of the partners. If the participating companies come from different countries and are not Swiss-based companies only, this is an international joint venture.

Finance

Since there is often a lack of equity when starting a business, small businesses should already have an advantage. All companies that have founded the joint venture are involved with their capital and also contribute financially and assume a financially entrepreneurial risk. Any losses are easier to carry. Legally and economically, companies continue to be independent, even if they are involved in a joint venture.

Sharing know-how

The prerequisite for a joint venture is that all parties involved in the corporate strategy pursue the same goals. In this way, the resources of each partner - for example, market knowledge, market positioning, and expertise or production facilities - can be optimally utilized. By bundling the entrepreneurial strengths, the companies save costs and create synergy effects. These, in turn, bring a competitive advantage for joint projects, from which all parties can benefit.

Competitive advantages

In addition to a good business strategy, a joint venture primarily offers competitive advantages - you are stronger together with third parties. This means that one's own interests can also be better enforced. Companies that join together to form a joint project can be better and more successful in their industry. For example, companies can save money by cooperatively supporting the costs of research and development activities, especially since the R&D sector is very much supported by Swiss authorities. The combined know-how of companies can also lead to new insights that the competition does not have. This is a tremendous advantage, especially to penetrate international markets.

Positioning in the international market

Because joint ventures can respond more quickly to increasing globalization, they are particularly suitable and important for cross-border technology transfer. Financially, companies participate equally and are involved in countries that are rich in natural resources or in countries where they find the necessary skilled workforce to fulfill certain production needs or for any other purposes that require business operations in various jurisdictions.

The AG – most common legal form for a joint venture

Considering the characteristics of a joint venture, the AG is the most common legal form used for these types of projects. The Swiss AG has a similar structure to a corporation or a joint-stock company. This type of company can be founded by legal entities, which can benefit from limited liability. It’s the same as if the corporation were founded by natural persons. The companies can still function as separate legal entities, but they can enter into contractual and financial agreements.

The transfer of shares is also easier for AGs than for other types of legal forms, such as the Swiss GmbHs for example. As an alternative to forming a contractual joint venture, the companies should be prepared to the formalities required to set up a corporate joint company just like any other Swiss company and adhere to the accounting and auditing rules established for regular companies. If the Swiss corporate joint venture is not established as a public company, there is no obligation to register or publish annual accounts and business reports.

Swiss corporate joint ventures are required to provide basic details to register with the Swiss Commercial Register. These details include the name and the domicile of the company, its business purpose, information on the company’s directors and managers, and the share capital amount. Details regarding the shareholders are not required.

In addition, Swiss corporate joint ventures can benefit from various tax privileges and take advantage of tax benefits under certain conditions. However, for more information regarding tax planning and tax advantages for this type of companies, it's recommended to acquire the support of specialists in this field.

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