Harnessing Innovation through Legal Structures - the Liechtenstein Venture Cooperative

Josef Bergt
2023

In the ever-evolving landscape of global business, the Principality of Liechtenstein has emerged as a beacon of innovation, particularly in the realm of legal structures. One such innovative legal structure that has been gaining traction is the Liechtenstein Venture Cooperative (LVC) which is a small cooperative pursuant to Art. 483 et seq. of the Liechtenstein Persons and Companies Act (“PGR”). This unique entity, designed to foster collaboration and innovation, has been the subject of much interest and discussion among legal and business professionals alike.

The LVC, a small cooperative under Liechtenstein law, serves as a platform for multiple stakeholders to collaborate on the development and refinement of an innovation. This cooperative structure is not merely a theoretical concept; it is a practical tool that has been implemented with success. and the invention or innovation has to be described in detail within the innovation certificate, a crucial document that forms the bedrock of the LVC.

Once the innovation is clearly defined, the conditions for its introduction into the LVC are determined. This step is pivotal as it sets the stage for the cooperative's operation. Subsequently, the statutes of the LVC are adjusted to align with the specific needs and goals of the cooperative. The final step in the establishment process is the formal founding of the LVC, marking the birth of a new entity designed to foster innovation. The invention is transferred to the LVC and thus legally no longer belongs to the actual inventor and cannot be exploited by the inventor anymore.

The LVC is not a static entity; it is dynamic and adaptable. It can be used to develop an idea to market maturity, conduct market tests, and even navigate the complexities of tax obligations. The LVC also has the flexibility to admit new members, open a bank account, hire employees, and register patents. In certain circumstances, an LVC can be converted into another form of company, demonstrating its inherent adaptability (e.g., conversion into a cooperative society and subsequently into a company limited by shares). 

The LVC can finance the development of an innovation through work and capital investments. The LVC can hire personnel and award contracts to third parties for this purpose.

Questions to be considered in determining the conditions for the contribution of the invention to the LVC include the number of people involved in the "invention process", the individual contribution of each inventor to the idea, the importance of inventors retaining control over the innovation process, and the amount of work the founders have done before the establishment of the LVC. The conditions determined will be entered into the Contribution Regulations and the Share Book. Members of the LVC receive membership points which correspond to a share or stake in the LVC with voting and/or dividend rights. Membership points may be allocated for provision of capital, work and/or intellectual property. The ratio may also adjust over time as determined on the outset in the Contribution Regulation.

The registration in the commercial register is voluntary. However, registration has the advantage of securing the name of the LVC and increasing visibility to business partners and it may also facilitate opening business banking accounts with banking partners. If the LVC is not registered in the commercial register, it must register with the tax administration and will receive a tax number.

The elaboration and development of an innovation, if carried out on one's own account, is not subject to a licensing requirement. However, development services provided for third parties may constitute a licensable commercial activity. 

The LVC has no minimum capital and the liability of members can be limited to the assets of the LVC. As a legal entity, the LVC is subject to ordinary tax liability, particularly income tax.

In conclusion, the LVC is a testament to Liechtenstein's commitment to fostering innovation and collaboration through legal structures. It is a unique entity that combines the principles of cooperation with the drive for innovation, providing a platform for multiple parties to collaborate and bring an idea to fruition.

Executive Summary:

• The Liechtenstein Venture Cooperative (LVC) is a unique legal structure designed to foster innovation and collaboration.
• The establishment of an LVC involves a series of steps, including the description of the innovation, determination of conditions for its introduction into the LVC, adjustment of the statutes, and the formal founding of the LVC.
• The LVC is a dynamic and adaptable entity, capable of conducting market tests, hiring employees, registering patents, and even converting into another form of company.
• Members of the LVC receive membership points representing a stake in the LVC with voting and/or dividend rights, allocated for capital, work, and/or intellectual property contributions.
• The LVC represents Liechtenstein's commitment to fostering innovation and collaboration through legal structures.
• Registration of the LVC in the commercial register is optional but beneficial for securing the LVC's name, increasing visibility, and facilitating business banking account setup.
• The LVC has no minimum capital requirement, and liability can be limited to the LVC's assets.
• The LVC, as a legal entity, is subject to ordinary tax liability, including income tax.