What does it mean to transfer LLC shares?
Anyone who transfers LLC shares legally transfers shares in a limited liability company. The new person thereby not only takes over an economic participation, but generally becomes a shareholder of the LLC.
The shares show the nominal value with which someone is involved in the LLC. The shareholders are registered with the number and nominal value of their shares in the commercial register (Art. 791 CO). In addition, the LLC must keep an internal share book in which, among other things, the shareholders, their address, and the number and nominal value of the shares are listed (Art. 790 para. 1 CO, Art. 790 para. 2 CO).
It is therefore important: Anyone who wants to transfer LLC shares must not only conclude a contract. An internal company decision and subsequent administrative implementation are also regularly required.
What form is required for the transfer of LLC shares?
By law, the transfer of LLC shares must be in writing. This applies both to the obligation to assign and to the actual assignment of the shares (Art. 785 para. 1 CO).
In practice, this means: Buyer and seller should sign a written assignment agreement. This contract must clearly show which shares are being transferred, who is transferring them, and who is acquiring them. A mere verbal agreement is not sufficient.
Under current law, public notarization is generally no longer required. However, in exceptional cases, it may be necessary if the articles of association of the specific LLC still require it or if an amendment to the articles of association becomes necessary at the same time. This may be the case, for example, if the shareholders or the specific shareholding are listed by name in the articles of association and this information needs to be adjusted.
The assignment agreement must also refer to statutory rights and obligations, unless the acquirer is already a shareholder (Art. 785 para. 2 CO). Such rights and obligations may, for example, concern additional payment obligations, ancillary performance obligations, non-compete clauses, rights of first refusal, or purchase rights. This point in particular is often forgotten in practice. If required information is missing, this can cause problems during registration in the commercial register.
Is the consent of the shareholders' meeting required?
Yes, in principle, the assignment of shares requires the consent of the shareholders' meeting. The shareholders' meeting can even refuse consent without giving reasons (Art. 786 para. 1 CO).
This principle fits the LLC. Unlike in a purely capital-based investment, the person of the shareholder plays an important role in the LLC. The existing shareholders should therefore be able to help decide who newly enters the company.
However, the articles of association may deviate from the legal principle. In particular, they can waive the consent requirement, define grounds for refusal, exclude the transfer entirely, or provide for special grounds for rejection (Art. 786 para. 2 CO). Therefore, the first practical step is always to look at the articles of association.
If consent is required, the transfer only becomes legally effective with this consent (Art. 787 para. 1 CO). The Federal Supreme Court clearly states that the consent of the shareholders' meeting is constitutive in such a case, while the entry of the acquirer in the commercial register only has a declaratory meaning (BGE 140 III 418 E. 6.2.2).
Simply put: The commercial register entry documents the change externally. If the articles of association require consent, the effective transfer already occurs with the consent, not only with the commercial register entry.
What happens if the company does not make a decision?
If the shareholders' meeting does not reject the consent within six months after receipt of the request, consent is deemed to have been granted (Art. 787 para. 2 CO).
This rule protects the transferring person and the acquiring person from a deadlock. The LLC cannot simply leave the transfer lying around indefinitely. It must react within the deadline if it wants to refuse consent.
Nevertheless, it is important for practice to document the process cleanly. It should be clearly verifiable when the request for consent was received by the company and whether a decision was made. Without proper documentation, disputes may arise later.
How does the transfer work step by step?
The process usually begins with reviewing the articles of association. These state whether the transfer is freely possible, whether consent is necessary, whether special grounds for rejection apply, or whether additional formal requirements exist.
The assignment agreement is then drafted. It should contain the parties, the LLC, the number and nominal value of the transferred shares, the time of transfer, and the necessary references to statutory rights and obligations. Since buyer and seller can affect not only economic rights but also corporate law obligations with the transfer, the contract should be formulated precisely.
If consent is necessary, the shareholders' meeting must decide on the assignment. The resolution should be minuted. Depending on the articles of association and the specific case, a circular resolution may also be possible. The crucial point is that the consent decision can later be proven to the commercial registry office.
After effective execution, the company must register the transfer with the commercial register. The Commercial Register Ordinance explicitly prescribes that the company must register all transfers of shares for entry, regardless of whether they occur by contract or by law (Art. 82 para. 1 HRegV).
A proof of the transfer and, unless the articles of association waive the consent, a proof of the consent of the shareholders' meeting must be submitted to the commercial registry office (Art. 82 para. 2 HRegV). The new shareholder may only be registered if there is gapless proof that the share has passed from the previously registered person to the new person (Art. 82 para. 3 HRegV).
Finally, the LLC must update its share book. The share book must be kept internally and must be accessible in Switzerland at all times (Art. 790 para. 1 CO). The documents on which an entry is based must be kept for ten years after the registered person has been deleted (Art. 790 para. 5 CO).
Which documents are typically required?
For the registration in the commercial register, the written assignment agreement, the consent resolution of the shareholders' meeting, and the commercial register application are generally required. Depending on the case, powers of attorney, copies of ID, certified signatures, or foreign registry extracts may be added.
The exact requirements may vary in detail depending on the commercial registry office. However, the legal basis remains the same: The company must register the transfer and prove the gapless transfer (Art. 82 HRegV).
Foreign acquirers deserve special attention. For natural persons, a copy of ID may be necessary. For foreign companies, proof of their legal existence is regularly required, often with certification or apostille. Clarifying early on which documents are required avoids delays.
When is the transfer truly completed?
Legally, one must distinguish between effectiveness and registration. If the consent of the shareholders' meeting is necessary, the assignment only becomes legally effective with this consent (Art. 787 para. 1 CO). The commercial register entry is important thereafter, but basically has a declaratory effect (BGE 140 III 418 E. 6.2.2).
This means: The entry in the commercial register is not simply incidental. It is prescribed by law and central for external publicity. But it is not in every case the moment in which the membership materially arises.
The share book is also important, but is not the actual reason for the transfer. It documents internally who holds which shares. The legal basis for this internal documentation can be found in Art. 790 CO.
Which mistakes should you avoid?
The most common mistake is not checking the articles of association. Especially older articles of association may contain special formal requirements, consent requirements, or restrictions. Anyone who signs a contract directly without knowing these rules risks delays or an ineffective transfer.
A second common mistake lies in the assignment agreement. It must not only describe the sale, but clearly state the assignment of the specific shares. Unclear formulations can lead to problems with the commercial register or between the parties.
A third mistake is the missing or poorly documented consent of the shareholders' meeting. If consent is required, it is crucial for the effectiveness of the transfer (Art. 787 para. 1 CO). The resolution should therefore be clearly minuted.
Finally, updating the share book and fully submitting the commercial register application after the transfer is often forgotten. Although these steps are administrative, they are legally relevant and should not be postponed.
If you need support with the topic of changes in the commercial register, Jurata is always happy to help: Changes.
Frequently asked questions about the transfer of LLC shares
Can I sell LLC shares without consent?
You can prepare and sign a contract. However, if the articles of association do not waive the consent, the assignment only becomes legally effective with the consent of the shareholders' meeting (Art. 786 para. 1 CO, Art. 787 para. 1 CO).
Does the assignment agreement have to be notarized?
By law, the written form is generally sufficient (Art. 785 para. 1 CO). However, public notarization may be necessary if the articles of association require it or if an amendment to the articles of association is required at the same time.
Can the shareholders' meeting simply refuse consent?
Yes, unless the articles of association provide otherwise, the shareholders' meeting can refuse consent without giving reasons (Art. 786 para. 1 CO). However, the articles of association may contain deviating rules (Art. 786 para. 2 CO).
Is the transfer only valid upon registration in the commercial register?
Not necessarily. If consent of the shareholders' meeting is required, the assignment becomes legally effective with this consent (Art. 787 para. 1 CO). Registration in the commercial register is nevertheless prescribed by law (Art. 82 HRegV). The Federal Supreme Court confirms for this case that the commercial register entry has a declaratory meaning (BGE 140 III 418 E. 6.2.2).
