Statutes: What founders need to know

What are articles of association anyway?

Articles of association are the legal basic structure of a legal entity. They state what an organization exists for, where its registered office is, how it is organized, and which rules apply to important decisions.

In practice, you can think of them as an internal constitution. They answer crucial questions such as:

• What is the name of the organization?

• Where is its registered office located?

• What purpose does it pursue?

• Who decides on important questions?

• How are members, shareholders, partners, or cooperative members informed?

• What special rights or obligations apply?

The important thing is: not every business activity needs such basic rules. A sole proprietorship does not have articles of association. For legal entities such as stock corporations, LLCs, cooperatives, and associations, however, they are a central founding document.

For which legal forms do you need them?

You need articles of association primarily for legal entities such as stock corporations, LLCs, cooperatives, and associations. The details differ depending on the legal form.

In the case of a Aktiengesellschaft, the basic rules are established in the incorporation deed. The founders declare the establishment of a stock corporation in a public deed, define the articles of association, and appoint the governing bodies (Art. 629 Abs. 1 OR).

In the case of an LLC, the process is similar. It is also established in a public deed, with the founders defining the articles of association and appointing the governing bodies (Art. 777 Abs. 1 OR).

In the case of a Genossenschaft, a public deed is also required. In it, the founders declare the establishment of a cooperative, and define the basic structure and the governing bodies (Art. 830 OR).

In the case of an Verein, the format is simpler. An association acquires its legal personality as soon as the will to exist as a corporate body is apparent from the written rules. These must provide information about the purpose, means, and organization (Art. 60 Abs. 1 ZGB, Art. 60 Abs. 2 ZGB).

What must be mandatory included?

The minimum content depends on the legal form. Typically, the name, registered office, purpose, and basic organizational questions are common to all.

For founders, the purpose is particularly important. It should be formulated clearly, with sufficient specificity, and realistically. Purposes that are formulated too narrowly can be an obstacle later on if the business model continues to develop. Purposes that are too broad or unclear can lead to inquiries from the commercial register.

What else should be regulated?

In addition to the legal minimum, you should regulate everything that is important for future collaboration. Good basic rules prevent later disputes.

Depending on the legal form and project, the following points in particular can be useful:

• Organization of management or administration

• Convening and conducting meetings

• Decision-making on site, in writing, virtually or hybrid

• Voting rights and qualified majorities

• Transfer of shares, portions of capital, or memberships

• Pre-emptive rights or consent requirements

• Additional performance obligations or capital contribution duties

• Non-compete clauses or duties of loyalty

• Regulation of auditing or opting-out

• Procedure in the event of resignation, exclusion, or death of a member

• Use of profit, assets, or liquidation proceeds

Not every idea must necessarily be included in the articles of association. Some points are better regulated in a shareholder agreement, partner agreement, organizational regulations, or separate internal regulations. As a rule of thumb: whatever is meant to be permanently binding upon the company, its governing bodies, or individuals joining later must be carefully brought to the correct level of regulation.

Which clauses only take effect if they are explicitly included?

Certain special rules are only binding if they are explicitly stated in the basic rules. This is particularly important for founders because such points are not simply «implied» later on.

In the case of the cooperative, the law lists quite a few of these provisions. These include coop certificates, contributions in kind, deviating rules on the acquisition and loss of membership, personal liability, call-up of additional capital, special performance obligations, deviating organizational rules, voting restrictions, and rules on the use of balance sheet profit or liquidation surplus (Art. 833 OR).

In the case of the stock corporation, contributions in kind must be designated in the basic rules. This includes the object and valuation, the name of the contributing person, the shares issued in return, as well as any other consideration from the company (Art. 634 Abs. 4 OR). Even payment through offset must be specified with the amount of the receivable, name of the shareholder, and the shares coming to him (Art. 634a Abs. 3 OR). If special advantages are granted upon establishment, the favored persons as well as the content and value of the advantage must be specified (Art. 636 OR).

For the LLC, the law refers to the corresponding corporate law rules in the case of contributions in kind, offsets, and special advantages (Art. 777c Abs. 2 Ziff. 1 OR).

The practical consequence is clear: if you want to agree on special rights, obligations, or contributions during establishment, this should not become apparent only shortly before notarization.

How are articles of association created upon establishment?

In the case of stock corporations, LLCs, and cooperatives, the articles of association are established as part of the public notarization. For an association, the written form is generally sufficient.

For a stock corporation, they are part of the documents to be attached to the incorporation deed (Art. 631 Abs. 2 Ziff. 1 OR). For the LLC, the same applies (Art. 777b Abs. 2 Ziff. 1 OR). For the cooperative, the rules must be drawn up in writing and presented to an inaugural meeting for discussion and approval (Art. 834 Abs. 1 OR).

Which version applies is also important for the commercial register. The date of the articles of association is the day on which the founders adopted them or the responsible body decided on the latest amendment (Art. 22 Abs. 1 HRegV). If they are amended, a complete new version must be submitted to the commercial registry office (Art. 22 Abs. 3 HRegV). For stock corporations, LLCs, and cooperatives, they must be certified by a notary (Art. 22 Abs. 4 lit. a HRegV). For associations, the signature of a board member is sufficient (Art. 22 Abs. 5 HRegV).

How do you change them later?

An amendment is possible, but is formally complex depending on the legal form. Therefore, it is worth doing neat work right from the incorporation.

In the case of a stock corporation, the resolution of the general assembly or the board of directors regarding an amendment must be publicly notarized and entered in the commercial register (Art. 647 OR). For the LLC, this applies to the resolution of the shareholders' meeting or the managing directors (Art. 780 OR). In the case of the cooperative, the resolution of the general assembly or management must be publicly notarized and entered in the commercial register (Art. 838a OR).

In the case of the association, the amendment is usually simpler, provided that its own rules are followed. It is therefore crucial that responsibilities, path of convening, and the necessary majorities are clearly formulated.

Which mistakes happen frequently in practice?

The most common mistakes are purposes that are unclear, blindly copied templates, and a lack of rules for conflicts.

Templates can be helpful, but they do not replace one's own decisions. Anyone who simply adopts a template quickly overlooks points that are important for the specific project.

Typical stumbling blocks are:

• The purpose does not fit the planned business model.

• The capital or share structure is unclear.

• Communications via email are not neatly regulated.

• Special contributions or advantages are missing.

• Voting rights and majorities do not match the founders' constellation.

• Resignation, exclusion, or share transfer are not thought through.

• The rules contradict a separate contract between the parties involved.

• Subsequent changes were made unnecessarily complicated.

Especially with multiple founders, a brief reality check is therefore worthwhile: what happens if someone wants to step out, stops working along, wants to transfer shares, or a conflict arises?

If you need assistance with incorporation, Jurata is happy to help you at any time.

Frequently asked questions about articles of association

Are template articles of association enough for incorporation?

Templates can be sufficient for simple standard cases, but should always be adapted. They usually represent the statutory minimum. As soon as multiple founders are involved, special contributions exist, or rights and duties should be individually regulated, a more detailed check is required.

Are articles of association publicly viewable?

For companies registered in the commercial register, the submitted documents are generally part of the register practice. For founders, this means: confidential side agreements often do not belong in this document, but rather in a separate contract, provided that is legally permissible and useful.

Can you regulate everything freely?

No. The legal limitations remain in place. The basic structure must not bypass mandatory law. Furthermore, certain contents in stock corporations, LLCs, cooperatives, and associations must meet the respective legal requirements.

What is the difference to a shareholder agreement?

Articles of association regulate the basic structure of the company, whereas a shareholder agreement primarily regulates the relationship between specific shareholders. The contract can be more flexible and confidential, but does not automatically take effect against all subsequent participants or governing bodies.