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Exploring a move to a Swiss Verein structure?

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Many firms are exploring a move to a Swiss Verein structure. Vereins are seen as an effective way of presenting a single, global brand while allowing firms to maintain their status as separate legal entities. So firms still maintain their profit pools separately from the collective entity.

While there are business benefits, a Verein structure is not for everyone. You should explore many things before taking the plunge. Will it provide your firm tax efficiency? Will it enable regulatory safety? What is the likely impact of cross jurisdictional liability on your partners and other members? Which firm within the structure will ensure governance? What recourse will be there for conflict?, and so on.

If after evaluating, a Verein structure is indeed right for your firm, then from the outset ensure that there is clarity among all member firms on the following:

  1. What is the goal of the Swiss Verein structure? Is it brand identity, local control or firm growth? And if billing, pricing authority and content selection are all conducted at the local level, then what is the purpose of the Verein structure?
  2. Which firm/firms will approve the content/products and pricing for services offered?
  3. In which countries will you be required to fulfil the Verein?
  4. With reference to the contracting parties, who would be the Head entity? And will the head entity have the authority to contract for all other entities? Also, will the main contracting party agree to indemnify your firm in the event of any breaches of contractual terms by the sub-entities in the structure?
  5. Complying with privacy laws is critical and the laws vary across different jurisdictions. Will the Head entity be able to represent and warrant to you that it will comply with rules pertaining to the exportation of data across the world? And if so, will the primary contracting party indemnify you?
  6. What will be the governing law for the agreement? For instance, if there is a dispute at a territory level, which law will apply? And similarly, if a dispute was to relate to a local law issue, what would be the recourse?
  7. How will the invoicing be dealt with? Will the Verein receive all the invoices or will it be the head entity or any other?
  8. What currency will the services be billed in? If it is to be billed in one currency, which firm/firms will bear the currency rate risk?
  9. Who will be the global account manager?
  10. How will inter-company revenue transfers be handled if a Verein wants all of this to be billed out of one jurisdiction? As you can imagine, this will require tremendous coordination among accounting/finance departments across all business units.

Many multinational professional services firms follow a decentralised Swiss Verein structure to limit their accountability. This means that their operation/contracts are only bound by local regulators and any issues arising in one region does not impact business in others. However, from a CRM standpoint, such an approach impacts data sharing – sometimes diminishing the benefits of a centralised CRM function to support the achievement of business goals. Also, there is no upfront cost advantage – i.e. you cannot transfer user licences purchased for your CRM system to member firms operating under the Swiss Verein.

If you are going for a Verein, talk to your InterAction Account Manager/Client Advisor – they will be able to advise you on how to go about securing the new licence keys and explain how your InterAction maintenance and support agreement under a Swiss Verein structure will change.

Tags: InterAction
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