An association is an association of persons organized as a corporate entity. It can have any purpose, unless it is unlawful or against good morals. The supreme corporate body of an association is the members’ meeting. The board is entrusted with the day-to-day business management, it represents the association and is authorised to sign. The association’s assets are available to meet the association’s liabilities. However, the articles of association can also specify that liability is limited or that the obligation for all members or a certain group of them to put up further security is limited.
It must be clearly evident from the purpose provision of an association whether or not a business run along commercial lines is conducted. There is no business run along commercial lines if the purpose consists in the investment or management of assets or in the holding of participations or other rights. An exception, however, is the case where the type and extent of this activity require a business run along commercial lines and orderly bookkeeping.
Under certain conditions, an association can be under an obligation to be audited. This is the case either if a member of the association that is subject to personal liability or to an obligation to put up further security so demands, or if the association exceeds two of the following maximum amounts in two consecutive financial years:
- Balance sheet total of CHF 6 millions
- Turnover proceeds of CHF 12 millions
- 50 full-time positions on annual average
The formation of an association does not require any capital. However, the number of members must be sufficient to form the corporate bodies and to manage the association. If an association has an economic purpose which is related to a business run along commercial lines (e.g. trade or manufacturing business), it is required to be entered in the commercial register and it acquires legal personality upon such entry. Entry in the commercial register is optional for all other associations (e.g. political, cultural or religious associations) and associations which do not conduct a business run along commercial lines. They are endowed with legal personality as soon as the formation of the association has been recorded in the articles of association.
The costs incurred by an association for its entry in the commercial register are CHF 100.00. The following documents must be filed:
Application letter with certified signatures:
- Contents of the entry
- The name, type of legal entity and registered office
- Purpose of the association
- The organisation and representation, stating the following information: family name, first name, date of birth, nationality and place of residence or registered office or corporate name and registered office of the members of the board and the type of signature;
- The declaration of the elected members of the board and the audit authority (if any) to the effect that the election is accepted (if this involves a legal entity and if its registered office is not in Liechtenstein, a relevant official extract from the commercial register must be produced)
- The corporate signature declaration (sample signature) of the persons authorised to represent the association. The (sample) signatures must be certified. A copy of the articles of association signed by the chairperson, another member and the keeper of the minutes of the constituent general meeting or by all founders
- Date of the articles of association
- The minutes of the constituent meeting of the association
- If the articles of association require the members to be personally liable or to put up further security, the register of members
There is a disclosure requirement for associations subject to the obligation to be audited. Associations which conduct a business run along commercial lines are required to keep an orderly business accountancy. Even associations which do not conduct a business run along commercial lines are required to keep books. This bookkeeping must be in line with the principles of orderly bookkeeping and must include appropriate records of the financial circumstances. For example, documentary evidence presenting a comprehensible account of the course of business and development of the assets must be kept.
Associations are free to choose their names. Associations entered in the commercial register, however, must include the word “Verein” in their name or in an addition. Made-up names and terms denoting an object are permissible as well, unless they contradict the purpose of the association. National and international designations, in particular the words “Liechtenstein”, “Staat”, “Land”, “as well as designations of international organisations such as “Red Cross” or “UN” must not be included in the name of an association, unless an exception is granted by the Office of Justice.
Pros and cons
- No capital needed
- Type of legal entity for any purpose
- A business run along commercial lines can be conducted
- Unless otherwise provided in the articles of association, only the assets comprised in the association are available to meet the liabilities
- Disclosure requirement only for associations which conduct a business run along commercial lines or which are subject to the obligation to be audited
Statutory basis (German only)