Organisational deficiency (Organisationsmangel)

An organisational deficiency (Organisationsmangel) describes a situation where a Swiss company no longer has a valid registered office, a Swiss-resident representative, a mandatory statutory auditor, or a person holding signing authority. The Commercial Register (Switzerland) can then itself initiate the company's liquidation.

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The duty to appoint a statutory auditor depends on company size: a limited statutory audit is mandatory beyond 10 full-time equivalents, and a full statutory audit becomes mandatory once two of the following three criteria are exceeded for two consecutive financial years: a balance sheet of at least CHF 20,000,000, revenue of at least CHF 40,000,000, or at least 250 full-time equivalents.

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This administrative dissolution mechanism, specific to Swiss law, has no exact equivalent in French law, where striking off a company for organisational deficiency generally requires a more formal judicial procedure. A Swiss startup that neglects, after a change of management or a departure, to appoint a new Swiss-resident representative can find itself in deficiency without any court decision having been needed to trigger liquidation.

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In financial due diligence of a Swiss target, checking that the required statutory auditor is in place and that signing authorities are up to date rules out a forced-dissolution risk that would retroactively undermine the reliability of the accounts presented to the buyer.