Purpose change at the stock corporation or LLC

Introduction

Changing the purpose of an LLC (GmbH) or stock corporation (AG) is an important step in the evolution of a company. The company’s purpose defines the type of business it carries out. When this purpose is changed, new business opportunities may arise.

The change of company purpose has direct effects on:

• The strategic orientation of the company

• The legal options for action

• The relationship with business partners and stakeholders

• The position in the market

A change of company purpose requires careful planning and compliance with legal regulations. In this guide, we show you how to successfully go through the process of changing the company purpose - from the initial preparations to the final registration in the commercial register. In doing so, we provide practical tips on legal requirements, necessary steps, and important decisions for successful implementation

• What is a change of company purpose?

• Reasons for a change of company purpose

• Advantages and disadvantages of changing the company purpose

• Steps to carry out a change of company purpose

• Costs and duration of the process

• Conclusion

What is a change of company purpose?

The company purpose defines the area of activity of a company. A change of company purpose refers to the formal adjustment of the company purpose registered in the commercial register. The new purpose must be precisely formulated and reflect the actual business activities of the company.

For LLC and stock corporation:

The implementation of a change of company purpose requires a resolution by the shareholders' or general meeting, a notarial certification, and the subsequent registration in the commercial register for both the stock corporation and the LLC.

For sole proprietorship:

As a sole proprietor, the change of company purpose can be requested using an application form.

Reasons for a change of company purpose

The decision to change the company purpose is usually based on various business developments:

Strategic realignment

The strategic realignment of a company can encompass various aspects. The opening up of new business areas is often a priority in order to position the company more broadly and take advantage of new market opportunities. At the same time, it is important to continuously adapt to changing customer needs to remain competitive. The integration of additional services or products into the existing portfolio enables companies to expand their offerings and reach new target audiences.

Response to market changes

The digital transformation of the industry and the emergence of new technologies present companies with major challenges. Rapid technological development often requires adjustment of business models and processes. At the same time, consumer habits of customers are constantly changing. They increasingly expect digital solutions and innovative products. These market changes force companies to adapt their business activities and possibly expand their company purpose. This enables them to stay competitive and meet evolving market demands.

Advantages and disadvantages of changing the company purpose

The adjustment of the company purpose offers the following advantages for businesses:

• Opening up new business areas and markets

• Legally secure foundation for innovative business models

• Optimized positioning towards customers and partners

The disadvantages of changing the company purpose need to be carefully weighed:

• Notarial certification and commercial register entry incur costs

• Time required for preparation and implementation of the change

• Risk of rejection by shareholders or stockholders at LLC or stock corporation

Stakeholder response plays a central role in the process. Both internal and external interest groups need to be considered. For internal stakeholders, it is particularly important that employees receive clear information about the strategic direction and that shareholders receive a detailed justification for the change. For external stakeholders, customers and suppliers should be involved through personal discussions, while banks and business partners should be informed at an early stage.

Steps to carry out a change of company purpose

1. Analysis of the necessity and impact of the change of company purpose

The analysis of the change of company purpose comprises three core areas:

Strategic: The strategic analysis of market position and competition is central to evaluating a change of company purpose. Evaluating the current positioning and new business opportunities as well as analyzing the competitive situation reveals market gaps and potentials.

Legal: Contract compatibility is legally central in changes of company purpose. Existing contracts must be checked for compatibility as business relationships may be affected and require adjustments.

Financial: Changes of company purpose require accurate cost calculation for notaries, registers, and legal consultation.

2. Convening the shareholders' meeting to vote on the changes

The convening of the shareholders' meeting is in accordance with the legal provisions of the Code of Obligations.

In a stock corporation, at least two-thirds of the represented votes and the majority of the represented shares must approve the change of company purpose. In an LLC, the approval of at least two-thirds of the represented votes as well as the absolute majority of the total share capital is required for the change of company purpose. These majority requirements are stipulated in the Code of Obligations (CO).

3. Notarial certification of the resolution to change the company purpose

The notarial certification represents a legally mandatory step in changing the company purpose. The notary creates a public deed that documents the resolution to change the company purpose. This deed must include the following core elements:

• The new company purpose in the exact wording

• The vote result of the shareholders' meeting

• The confirmation of compliance with all legal requirements

The notarial certification forms the legal basis for the subsequent commercial register entry and ensures the legal security of the change of company purpose.

4. Registration of changes in the commercial register and publication in SHAB

After the notarial certification, the change of company purpose must be registered in the commercial register. The process includes:

• Submission of certified documents to the competent cantonal commercial register office

• Examination of documents by the commercial register office for completeness and legal conformity

• Registration of the change of company purpose after positive examination

• Automatic publication in the Swiss Official Gazette of Commerce (SHAB)

The registration in the commercial register is legally binding and makes the change of company purpose recognizable to third parties in the sense of the publicity effect. The publication in SHAB ensures the public announcement of the change and creates legal security for all business partners.

5. Updating all relevant documents to the new company purpose

After successful registration in the commercial register, systematic updating of all business documents is required: All company documents must be adapted. Internally, this affects business regulations, organizational rules, job descriptions, employee contracts, and policies. Externally, business papers, letterheads, business cards, advertising materials, website, and email signatures must be updated to ensure a uniform company appearance.

Costs and duration of processing a change of company purpose

The costs of changing the company purpose consist of several components:

• Notary fees: CHF 500-1,000

• Commercial register fees: CHF 300-500

The timeline is as follows:

• Preparation of documents: Several working days

• Certification by the notary: 1 working day

• Commercial register entry: 5-15 working days

• SOGC (Swiss Official Gazette of Commerce) publication: 1-2 days

The total duration of the process is usually 3-5 weeks. Careful planning and preparation of the necessary documents can speed up the process.

Conclusion

The success of a change of company purpose depends significantly on thorough preparation and compliance with all formal requirements.

Important success factors are:

• Detailed analysis of necessity and impact

• Professional preparation of the shareholders' meeting

• Correct execution of the notarial certification

• Timely registration in the commercial register

• Systematic updating of all documents

A professionally carried out change of company purpose forms the foundation for successful further development of the company and opens up new strategic perspectives. Jurata is happy to support you in the legally secure execution of the change of company purpose.