What Are the Risks of Buying a Shell Company?
As a rule, the purchase of a company is only sensible if the purchaser has an interest in the business operations of the company they are seeking to buy and not merely in the legal "shell".
Assumption of unknown debts and liabilities
An acquisition of shares or equity interest in a corporation (AG) or a company with limited liability (GmbH) does not affect the legal personality of the company, which means that all debts and liabilities are usually assumed upon acquisition.
Given that most claims only become time-barred after five or ten years, the new owner may face different types of previously unknown claims long after taking over the business. Besides claims under civil law, possible tax claims or outstanding social security contributions must be considered.
In order to minimize these risks as much as possible, it is advisable for every company acquisition to be preceded by a thorough due diligence review and a customized sale and purchase agreement with appropriate representations and warranties.
Given that careful due diligence can be a very time-consuming process, setting up a new company without any legacy issues is therefore generally the more efficient option.
Unlawfulness of trading with shell companies according to Swiss Federal Supreme Court case-law
The law requires companies that no longer carry out any business operations and no longer hold any realizable assets to be dissolved and deleted from the commercial register (Article 934 of the Swiss Code of Obligations). The Swiss Federal Supreme Court considers the purchase of a company that is merely a legal shell lacking in substance to be a circumvention of the statutory provisions on setting up and liquidating companies.
According to case-law, trading with companies that are permanently inactive and no longer hold any realizable assets is therefore null and void.
The specific legal consequences of such nullity for the parties involved depend on the circumstances of the case in question. In any event, trading with shell companies entails considerable legal uncertainties both for the seller and for the buyer.
Invalidity of the purchase in the case of over-indebted companies
If a company no longer carries out business operations, no longer holds any realizable assets and, in addition, is over-indebted, the transfer of shares or equity interest of such company is null and void by law (Article 684a of the Swiss Code of Obligations).
In practice, the commercial registers have been responsible for the active enforcement of such statutory nullity since January 2025. If the competent commercial register office has reasonable grounds to suspect that a null and void share transfer has occurred in the context of the registration of an amendment in the commercial register, the company is requested to submit a current signed annual financial statement. If the suspicion is confirmed, the requested amendment of the commercial register will be refused and an order for the official deletion of the company may be issued.
While, in contrast to a GmbH, the transfer of shares in an AG does not need to be recorded in the commercial register, upon takeover of a shell company for the purposes of setting up a company the executive bodies, the purpose and possibly also the company name will typically need to be changed, and all of these changes require registration in the commercial register.