The Swiss Association (Verein): Why Tech Companies Use Art. 60 ZGB for DAOs and Open-Source Projects

The Swiss association — the Verein — is the most democratic and the most accessible legal form in Swiss law. Governed by Articles 60 through 79 of the Swiss Civil Code (Schweizerisches Zivilgesetzbuch, ZGB), the Verein requires no minimum capital, no notarial deed, no mandatory commercial register entry (below certain thresholds), and can be formed by as few as two natural or legal persons. It is, by design, the legal form for voluntary associations of persons pursuing a common purpose.

In Crypto Valley, the Verein has found an unexpected second life. Industry associations like the Crypto Valley Association (CVA), the Swiss Blockchain Federation, and the Capital Markets and Technology Association (CMTA) are all organised as Vereine. But beyond the traditional industry body use case, the Verein has been adopted — and sometimes stretched — as a legal wrapper for decentralised autonomous organisations (DAOs), open-source software communities, and tokenised governance experiments that exist at the frontier of Swiss organisational law.

This article provides the legal analysis and practical guidance for understanding, forming, and operating a Swiss Verein — including an honest assessment of where the Verein model works for blockchain governance and where it breaks down.

Legal Foundation: Articles 60-79 ZGB

Formation (Art. 60 ZGB)

Article 60 ZGB provides the Verein’s formation requirements:

1. Written articles of association (Statuten). The Verein must adopt articles of association that set out at minimum: the purpose of the association, its resources, and its organisation. The articles need not be notarised — a simple written document signed by the founding members is sufficient.

2. At least two members. The Verein requires a minimum of two members, who may be natural or legal persons.

3. Non-commercial purpose. Article 60 para. 1 ZGB specifies that the Verein is for associations that have a political, religious, scientific, artistic, charitable, social, or other non-commercial purpose. This non-commercial purpose requirement is the most significant limitation on the Verein’s use for business activities.

The Verein acquires legal personality upon adoption of its articles of association — no government registration is required for the basic formation. This is unique among Swiss legal forms and reflects the Verein’s origins in the freedom of association guaranteed by Article 23 of the Swiss Federal Constitution.

Commercial Register Entry (Art. 61 ZGB)

While commercial register entry is not required for basic formation, Article 61 ZGB requires registration if the Verein:

• Conducts a commercial business operation (kaufmännisches Gewerbe) that requires entry under the accounting provisions of the Code of Obligations (Art. 957 CO), or
• Is subject to an audit requirement.

In practice, Vereine with significant economic activity — annual revenue exceeding CHF 500,000, total assets exceeding CHF 20 million, or employment of 10 or more full-time equivalents — will trigger the accounting and potentially the audit requirements that mandate commercial register entry.

Even where not legally required, voluntary commercial register entry is common for Vereine that want to:

• Open bank accounts (many banks require a commercial register extract)
• Enter into significant contracts (counterparties may require proof of legal existence)
• Establish credibility with institutional partners

Purpose: The Non-Commercial Constraint

The non-commercial purpose requirement (Art. 60 para. 1 ZGB) is both the Verein’s defining feature and its most significant constraint for tech applications.

A Verein may not pursue primarily commercial (gewinnstrebig) purposes. If the primary purpose is commercial — generating profit for distribution to members — the Verein form is inappropriate, and the entity should be organised as a commercial entity (AG or GmbH).

However, the boundary between non-commercial and commercial is not as sharp as it might appear:

• A Verein may generate revenue and even surplus (profit) from its activities, provided that the surplus is used to further the association’s non-commercial purpose rather than distributed to members.

• A Verein may conduct ancillary commercial activities (Nebentätigkeit) that support its primary non-commercial purpose — for example, selling publications, organising paid conferences, or providing consulting services that further the association’s educational mission.

• A Verein may not have as its primary purpose the generation and distribution of profit to members. Profit distribution is antithetical to the Verein model and can result in reclassification as a commercial entity with attendant tax and regulatory consequences.

For blockchain applications, this means the Verein is appropriate for:

• Open-source software development communities
• Protocol governance bodies (where the purpose is ecosystem development, not profit generation)
• Industry associations and standards bodies
• Research and education organisations
• DAO wrappers where the governance function is genuinely non-commercial

The Verein is not appropriate for:

• Operating businesses generating revenue for member distribution
• Token projects where token holders expect financial returns
• Investment vehicles or fund structures

Governance: Democratic Structure

The General Assembly (Vereinsversammlung, Art. 64-66 ZGB)

The general assembly (Vereinsversammlung, also called Mitgliederversammlung) is the supreme organ of the Verein. It exercises the powers that are not delegated to other organs by law or the articles of association (Art. 65 ZGB). The general assembly’s non-delegable powers include:

• Adoption and amendment of the articles of association
• Election and removal of the board (Vorstand)
• Approval of the annual accounts and discharge of the board
• Dissolution of the Verein

Voting rights. Each member has one vote in the general assembly unless the articles of association provide otherwise (Art. 67 para. 1 ZGB). The one-member-one-vote principle is fundamental to the Verein’s democratic character. The articles may modify voting rules — for example, by creating different membership categories with different voting rights — but the democratic principle must be maintained.

Resolutions. Resolutions are passed by a majority of the votes of the members present (Art. 67 para. 2 ZGB). The articles may specify higher majorities for certain decisions (e.g., amendment of the articles, dissolution). Proxy voting is permitted if the articles allow it.

Meeting modalities. The 2023 revision of Swiss corporate law extended to Vereine the possibility of holding general assemblies electronically or in hybrid format, provided the articles of association allow it and appropriate measures ensure the identification of participants and the integrity of voting.

The Board (Vorstand, Art. 69 ZGB)

The board (Vorstand) manages the Verein’s affairs and represents it externally (Art. 69 ZGB). The articles of association define the board’s composition, election process, and authority.

Unlike the AG’s board of directors, the Verein’s board (Vorstand) has no specific composition requirements under the ZGB — no residency requirement, no minimum size, no qualification criteria (unless the articles impose them). This flexibility is both an advantage and a risk: it allows tailored governance structures but can lead to governance gaps if the articles are insufficiently detailed.

Representation. The board represents the Verein in dealings with third parties. The scope of the board’s representative authority is determined by the articles of association and can be registered in the commercial register if the Verein is registered.

Personal liability. Board members of a Verein owe duties of care and loyalty analogous to those of AG directors, though derived from the general provisions of the ZGB (Art. 55 para. 3 ZGB) rather than the specific provisions of Art. 716a and 717 CO. Board members can be personally liable for damages caused by their breach of duty — a risk that is often underestimated by volunteer board members of community-oriented Vereine.

Other Organs

The articles of association may establish additional organs — executive management, committees, advisory boards — as needed. A common structure for larger Vereine includes:

• General assembly (supreme organ, annual meeting)
• Board (Vorstand) (strategic direction and representation)
• Executive director or management team (day-to-day operations)
• Audit body (financial oversight, required if thresholds are met)

Membership

Admission and Resignation (Art. 70-71 ZGB)

The Verein’s articles determine the admission process. Common approaches include:

• Open membership. Any person (or entity) meeting specified criteria can join by application.
• Approval-based membership. Applications are reviewed and approved by the board or a membership committee.
• Invitation-only membership. New members are admitted only upon invitation from existing members.

Members may resign from the Verein at any time, subject to a notice period that may not exceed six months (Art. 70 para. 2 ZGB). Members may not resign during a period for which they have committed to remain members.

Expulsion (Art. 72 ZGB)

The articles of association may provide for the expulsion of members. If the articles do not regulate expulsion, the general assembly may expel a member for good cause (Art. 72 para. 3 ZGB). Good cause includes serious violations of the articles of association, actions damaging to the association, or non-payment of membership fees.

An expelled member may challenge the expulsion in court within one month of receiving notice (Art. 75 ZGB).

Membership Fees

The general assembly determines membership fees (Art. 71 ZGB). Membership fees are the traditional funding mechanism for Vereine, though many blockchain-related Vereine supplement fee income with grants, sponsorships, or token-based funding.

Financial Matters

No Minimum Capital

The Verein has no minimum capital requirement. It can be formed and operated with zero initial assets. This is the most radical difference from the AG (CHF 100,000) and GmbH (CHF 20,000) and is one of the primary reasons the Verein is attractive for community-driven projects.

Member Liability (Art. 75a ZGB)

Members of a Verein are not personally liable for the association’s debts — unless the articles of association specifically provide for member liability or member contributions (Art. 75a ZGB). In the absence of such provisions, the Verein’s assets are the sole recourse for creditors.

This limited liability protection — without any capital requirement — is an unusual feature of Swiss law. It means that a Verein can be formed with no capital, incur liabilities, and its members bear no personal financial risk (absent specific article provisions).

Accounting and Audit

Vereine that are required to register in the commercial register are subject to the accounting provisions of the Code of Obligations (Art. 957ff. CO) and must prepare financial statements in accordance with Swiss accounting standards.

Vereine exceeding the thresholds for an ordinary audit (250+ full-time equivalent employees, CHF 20 million+ in total assets, or CHF 40 million+ in revenue in two successive financial years) require an ordinary audit. Smaller registered Vereine may be subject to a limited (restricted) audit. Vereine below the registration threshold have no mandatory audit requirement, though voluntary audits are common practice for governance credibility.

Tax Treatment

Vereine are subject to federal, cantonal, and communal income tax on their net income and capital tax on their net assets. The tax rate is the same as for other legal entities — approximately 11.85% effective rate in the Canton of Zug.

Tax exemption is available for Vereine pursuing exclusively public benefit purposes (gemeinnützige Zwecke), subject to application to the cantonal tax authority. The criteria are similar to those for tax-exempt foundations: the purpose must serve the public interest, assets must be irrevocably dedicated to the exempt purpose, and no private benefit may accrue to members or insiders.

The Verein as a DAO Wrapper

The use of the Swiss Verein as a legal wrapper for decentralised autonomous organisations (DAOs) has attracted significant attention since 2017-2018, when several projects explored the concept of “DAO-as-Verein” structures.

Why the Verein Appeals to DAOs

The Verein’s structural features align, in several respects, with DAO governance ideals:

1. Democratic governance. The one-member-one-vote principle mirrors the governance ideals of many DAOs (though many DAOs use token-weighted voting, which diverges from this principle).

2. No minimum capital. DAOs often begin with minimal financial resources or with resources held in the form of tokens rather than fiat capital.

3. Flexible governance. The Verein’s articles can be tailored to accommodate novel governance mechanisms, including on-chain voting, proposal systems, and delegated authority structures.

4. Limited liability. Members are not personally liable for the Verein’s debts, providing a liability shield for DAO participants.

5. Non-commercial compatibility. Many DAOs genuinely pursue non-commercial purposes — protocol governance, ecosystem development, public goods funding — that align with the Verein’s non-commercial purpose requirement.

Where the Verein Breaks Down for DAOs

Despite these alignments, the Verein model creates significant friction with DAO operations in several areas:

Membership management. A Verein requires identifiable members who have been admitted through the articles’ admission process. Pseudonymous token holders on a public blockchain do not fit naturally into this framework. The Verein model requires a defined membership — knowing who the members are, maintaining a membership register, and managing admission and resignation processes. This is fundamentally at odds with permissionless token-based governance.

Token-weighted voting. Many DAOs use token-weighted voting (more tokens = more votes), which conflicts with the Verein’s default one-member-one-vote principle. While the articles can modify voting rules, creating a voting system where voting power is proportional to token holdings raises questions about whether the association remains genuinely democratic — the hallmark of the Verein form.

Profit distribution. If DAO participants receive financial returns — through token appreciation, yield from treasury deployment, or direct distributions — the Verein’s non-commercial purpose constraint may be violated. A Verein that functions as an investment vehicle for its members is using the wrong legal form.

Real-time governance. DAOs often operate with continuous, on-chain governance — proposals can be submitted and voted on at any time. The Verein’s governance model, while flexible, assumes periodic general assembly meetings and board decisions. Mapping continuous on-chain governance to the episodic governance of a Verein requires careful legal structuring.

Cross-border enforceability. A Swiss Verein is governed by Swiss law and subject to Swiss court jurisdiction. DAO participants distributed globally may have limited practical recourse through Swiss courts, and the enforceability of Verein governance decisions against participants in other jurisdictions is uncertain.

Practical DAO-Verein Structures

The most successful DAO-Verein implementations in Crypto Valley have adopted pragmatic compromises:

• Verified membership. DAO participants who wish to be Verein members undergo a KYC-lite admission process, establishing a defined membership within the broader (permissionless) DAO participant base.

• Hybrid governance. On-chain voting on protocol parameters is conducted through the DAO’s token governance. Off-chain governance — legal decisions, contracts, fiat transactions — is conducted through the Verein’s formal governance structure.

• Non-commercial purpose. The Verein’s purpose is limited to ecosystem development, education, or protocol governance. Commercial activities are conducted through a separate AG or GmbH.

• Treasury separation. The Verein holds only the fiat and operational assets needed for off-chain activities. The DAO’s token treasury is managed through multi-sig wallets or smart contracts outside the Verein’s formal balance sheet.

The Verein for Open-Source Projects

The Swiss Verein is also used as a legal home for open-source software projects and standards bodies. The Linux Foundation (Swiss chapter), various Ethereum community groups, and several open-source protocol teams have adopted the Verein form.

For open-source projects, the Verein provides:

• A legal entity that can hold assets (donations, grants, sponsorships)
• A governance structure for project decision-making
• The ability to enter into contracts (hosting, domain registration, service agreements)
• A liability shield for contributors and maintainers
• A non-commercial structure that aligns with the ethos of open-source development

The formation process for an open-source Verein is straightforward:

1. Draft articles of association defining the project’s purpose, membership rules, and governance structure
2. Hold a founding meeting with at least two founding members
3. Adopt the articles and elect the initial board
4. (Optionally) register in the commercial register if bank accounts or significant contracts are anticipated

The entire formation can be completed in a single day, with minimal cost (legal fees for articles drafting, if professional assistance is sought, typically CHF 2,000-5,000).

Industry Associations: The Traditional Use Case

The Verein remains the standard structure for industry associations in the Swiss tech and blockchain ecosystem:

Crypto Valley Association (CVA). Based in Zug, the CVA is the leading industry body for the Swiss blockchain ecosystem, with over 3,700 members. It organises the annual Crypto Valley Conference, publishes research reports, and advocates for blockchain-friendly regulation.

Capital Markets and Technology Association (CMTA). Based in Geneva, the CMTA develops open standards for the issuance, distribution, and trading of securities on distributed ledger technology. Its standards — including the CMTAT token standard — are widely adopted in the Swiss tokenisation ecosystem.

Swiss Blockchain Federation. An umbrella organisation of blockchain industry participants, policymakers, and academics that promotes Switzerland as a blockchain jurisdiction.

These industry associations demonstrate the Verein’s natural strengths: democratic governance, inclusive membership, non-commercial purpose, and the flexibility to adapt to the needs of a rapidly evolving industry.

Formation Checklist

1. Define the purpose. Clearly articulate the non-commercial purpose of the Verein.

2. Draft articles of association. Include: name, purpose, registered office, membership categories and admission process, governance structure (general assembly, board), voting rules, financial provisions, dissolution provisions.

3. Hold a founding meeting. At least two founding members must attend. The meeting adopts the articles and elects the initial board.

4. Prepare minutes. Document the founding meeting, the adoption of the articles, and the election of the board.

5. Commercial register (if needed). File for commercial register entry if the Verein will conduct commercial activities or needs banking access.

6. Open a bank account. Present the articles, founding minutes, and commercial register extract (if registered) to the bank.

7. Tax registration. Register with the Steuerverwaltung des Kantons Zug. Apply for tax exemption if the Verein qualifies.

The Swiss Verein is not a universal solution for blockchain governance, nor is it a substitute for the AG or Stiftung when commercial operations or protocol-level governance are the primary objectives. But for community-driven, democratically governed, non-commercial organisations — industry associations, open-source projects, and carefully structured DAO wrappers — the Verein provides a legal form that is uniquely simple, uniquely flexible, and uniquely Swiss.