Establishing a company in Switzerland

Procedures and Compliance

Establishing a company in Switzerland is quick and easy. The cost is moderate and it takes only a short time to accomplish. Our Consultants will help you with any questions you may have concerning legal structures, taxation and location, so that you may fulfil your project on schedule.

Establishing a Company in Switzerland
Legal Structure

All business forms defined in the Swiss Code of Obligations are available to domestic and foreign investors. Joint stock companies or corporations (SA in French, AG in German) and limited liability companies (SARL in French, GmbH in German) are the legal forms most commonly adopted by foreign investors. In both cases, the company’s liability extends only to corporate assets.

There are only a few differences between the two main legal forms of company in Switzerland. A limited liability company offers a solution with a relatively minimal capital investment and limited corporate liability; the joint stock company preserves the anonymity of silent partners and has simple procedures for share transfers.

The third most popular type of company for foreign business establishments is a branch office. A branch is an alternative to the formation of a legally separate subsidiary. It is not officially classified as a Swiss company, which means that the foreign parent company bears the financial responsibility. However, since the branch office is subject to Swiss law, it is treated as a Swiss company for legal and tax matters.

In addition to corporations, limited liability companies and branches, the Swiss Code of Obligations lists the following forms of business:

General partnership
Simple partnership
Joint venture
Franchising

The form best suited to your project will depend on the structure of your company, your anticipated business development, your operations in Switzerland and your tax priorities.

Company’s Name Availability

The name under which a company plans to do business can be chosen freely, with the exception of branch/regional offices, which must have the same company name as the head office, though new elements may be added to the name. The name must indicate clearly what legal form a company has; that is, whether it is a single-owner business, incorporated company or limited company. The chosen name must be clearly distinguishable from existing company names.

Registered Office Required

A Swiss corporation must have a registered office in Switzerland. If there is no need for a cor­poration to have office facilities and staff in Switzerland, a local attorney or trust company may be willing to provide the requisite registered office for an annual fee.

A domicile address for your company must exist before you create the company. If you have not yet found the ideal location, you may register a company at your lawyer’s or notary’s address.

Depositing Capital

The minimum capital for a limited liability company is SFr 20,000, which must be deposited in full into a Swiss bank. For a stock company the sum is SFr 100,000, and at least 50% of the capital must be deposited in a bank account in Switzerland.

AG Company
Class of Shares

The minimum par value of shares in a Swiss corporation is CHF 0.01. Shares may be issued in the form of registered or bearer shares.

Registered shares may be issued if at least 20% of their nominal value has been paid in. Registered shares are transferred by delivery of the endorsed share certificate(s), or by a written deed of assignment if no share certificates have been issued. In addition, registered shares may be made subject to a transfer restriction: the articles of incorporation may provide that registered shares may be transferred only with the consent of the corporation. In such case, the corporation may reject a request for consent to a transfer either for such cause as is stated in the articles of incorporation or if the corporation offers to acquire the shares from the seller at their intrinsic value. The possible causes of transfer restrictions are listed in the CO. Special provisions regarding transfer restrictions apply to corporations listed on a Swiss stock exchange.

Bearer shares may only be issued if their entire par value has been fully paid in. Bearer shares may not be subject to any transfer restrictions. Bearer shares are transferred by delivery of the share certificate(s) is any such certificates have been issued.

The identity of the shareholders is not recorded in the Commercial Register.

GmbH Company
Share Capital

The contributions to the capital made by each partner determine the amount of his quota. The “quotas” of the individual partners may vary but must be at least CHF 1,000 or a multiple thereof. All quotas are recorded in a register specifying the names of the partners, the nominal amount of the quotas and the amount paid in on each partner’s quota. At the beginning of each calen­dar year, such register is filed with the competent Commercial Register at the place of domicile of the limited liability company. The register is open to public inspection. The quotas cannot be represented by a negotiable instrument such as the shares in a Swiss corporation. The assignment of a quota requires the consent of at least three quarters of the entire capital. The articles of incorporation may make an assignment subject to certain condi­tions or may even prohibit the assignment at all. The assignment is only valid if recorded in a notarized deed.

Notary Deed

The incorporation of a Swiss corporation requires three persons or entities acting as incorporators. Such persons need not be Swiss citizens or residents. The incorporators may, by notarized power of attorney, appoint one or more proxies to form the corporation on their behalf. Accordingly, their presence in Switzerland is not required. If the power of attorney is notarized outside Switzerland, it must be accompanied by a so-called apostille under The Hague Convention or super-legalized by a certification by a Swiss embassy or consulate relating to the capacity of the foreign notary.

Filing with Federal
Commercial Registry

The corporation becomes a legal entity only upon its registration in the Commercial Register.

Notice of the registration is published in the Swiss Official Gazette of Commerce.

The entire registration process normally takes approximately two to three weeks from the date of the incorporation meeting, but may be shortened to around three business days upon consultation with the competent Commercial Registry.

Governing Bodies

You will need to decide who will represent your company in Switzerland (directors, members of the board and auditors, if applicable). Foreign nationals are permitted to do so, but at least one managing director with sole executive signatory status, or two directors with joint executive signatory status, must be domiciled in Switzerland.

Audit Requirements

An official complete audit is required by companies which are either listed on the stock exchange or which fulfil at least two of the following criteria:

Assets exceeding SFr 10 million
Total revenue exceeding SFr 20 million
More than 50 full-time employees
Audit is optional for companies with fewer than 10 full-time employees (so called micro-companies).
For all other limited liability companies and corporations, a limited statutory audit is mandatory.

Corporations (AG) and
Limited Liability Companies(GmbH)

Swiss Corporation (AG)
Advantages

There is no limitation on the maximum share capital of a Swiss corporation which makes this type of company more appropriate for larger business operations,

The possibility of authorized and contingent share capital facilitates the financing of the business of a Swiss corporation,

The corporate organization of a Swiss corporation is more detailed and more appropriate for larger business operations,

Shares in Swiss corporations may be more easily transferred than quotas in limited liability companies, so that the corporation is the only appropriate form if the shares are to be listed on a stock exchange or if a subsequent going public is intended,

The identity of shareholders in a Swiss corporation is not registered in the Commercial Register and, therefore, not open to public scrutiny.

Limited Liability Companies (GmbH)
Advantages

Lower capital requirement (minimum capital of a Swiss corporation is CHF 100,000, of which CHF 50,000 must be paid in, whereas the minimum capital of the limited liability company is CHF 20,000, of which CHF 10,000 must be paid in) which makes the limited liability company an ideal company for small business operations,

Neither a board of directors nor auditors are required by law for a limited liability company which lowers the agency costs,

The transfer of quotas in limited liability companies requires a notarized instrument and is thus more cumbersome.

The possible restrictions on the transfer of quotas in limited liability companies are not limited which may be an advantage where control over the company is a main concern (a similar result may however be achieved for a Swiss corporation by means of transfer restrictions in the articles of incorporation (to the extent possible) and additional contractual transfer restrictions in a shareholders’ agreement),

The articles of incorporation of a limited liability company may confer additional duties on the partners whereas the duties of shareholders in a Swiss corporation are limited to paying in the nominal value of the subscribed shares,

Incorporating vs.
Establishing a Branch Office

It may be advantageous to establish a branch office instead of a subsidiary if the Swiss business operations are only of marginal significance, or if the foreign company does not wish to fully capitalize its Swiss business operations. The credit standing of the Swiss branch office directly depends on the capitalization of the foreign company. Accordingly, branch offices may be established with a very thin capital base, or with only a minimum organization.

On the other hand, it may be advantageous to establish a company in Switzerland if the business operations are conducted on a larger scale. Also, a Swiss company is advantageous as compared to a branch office if the Swiss business operation should be completely separated from the foreign operations, so that a certain insulation of liability is possible. If a foreign company establishes a subsidiary in Switzerland, dealings between the foreign company and the Swiss subsidiary must be effected at arms’ length, however.