EEA/Switzerland: New style business platform for innovation - Venture Cooperative

Liechtenstein - member of the EEA on the one side as well as in the currency, customs and economic union with Switzerland on the other side – currently performed a notable amendment of its corporate law. By amending its Persons and Companies Act “PGR”, namely by adding comma 1a to the existing art. 483 et seq., originally introduced for the development of cooperatives mainly in agriculture and forestry, a new legislative home was given to the evolution of innovation in almost every sector.

While the aim of the historic concept of cooperatives was to support the generally weak agriculture of the 1920s and ‘30s, the latest amendment of art. 483 PGR benefits from the privileged and simplified conditions for a setup of a cooperative and applies the same standards also to nearly every other kind of business cooperation. In fact the current amendment expressly allows the setup of a Venture Cooperative in order to develop any kind of innovation or idea. However, the most evident advantage of the establishment of a Liechtenstein Venture Cooperative ("LVC") lies in its highly privileged and simplified setup conditions.

1) Starter Kit with Potential - The LVC is considered as legal entity with legal personality. Since Liechtenstein is a member in the EEA and in the economic union with Switzerland, the recognition of an LVC is relatively wide compared to usually known vehicles. The LVC may easily be transformed to a stock or limited company at a later stage.

2) Saving Time & Money - Being a legal entity, the founders/entrepreneurs may protect and save a name, trademark, patent or license by setting up an LVC. However, compared to conventional entities, this will be possible in less time and with a minimum of costs, which is due to the very simplified setup procedure of an LVC.

3) It’s not (all) about the Money - The founders do not have to deliver any monetary share capital. Like this, also contributions like manpower, the idea or innovation itself as well as investments in kind may be taken into account and the contributor will still hold a share in the LVC. Such LVC share may be transformed to a share in a stock company or limited company at a later stage.

4) Staying Safe - Even though no monetary share capital will have to be delivered, the shareholders of the LVC will not be personally liable for any debts of the LVC.

5) Convenient & Compliant – The LVC as well as its founders benefit from the liberal and modern tax regime of Liechtenstein.