Entity set up in Switzerland - DLA Piper Guide to Going Global

Form of entity

Stock corporation

Legal form intended for large-sized companies with high capital requirements, but also popular among smaller companies. Managed by a board of directors, which is elected by the general meeting of shareholders. The articles of incorporation may limit the transferability of a company’s shares.

Entity set up

This is an overview of certain aspects of Swiss corporate law as of the date hereof which does not purport to be comprehensive, and may not be relied upon as legal or other advice or in any other way.

Stock corporation (Aktiengesellschaft, AG / Société Anonyme, SA)

Unlimited number of shareholders allowed but at least 1 founder (individual or legal entity)
The stock corporation has sole liability for its debts and liabilities
Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends
Board of directors is the managing body and has the authority to represent the stock corporation with respect to third parties. The day-to-day management may be delegated to third parties by respective board resolution and enacting of organizational by-laws and
Annual audit report required (waiver possible for small companies).

Limited liability company (Gesellschaft mit beschränkter Haftung, GmbH / Société à Responsabilité Limitée, SARL)

Unlimited number of quotaholders allowed but at least one founder (individual or legal entity).
The limited liability company has sole liability for its debts and liabilities, although articles of incorporation may impose obligation to pay in additional capital.
Taxed on its earnings at a corporate level and quotaholders are taxed on any distributed dividends.
In absence of any rules to the contrary, the management is delegated to all partners.
Generally, annual audit report required (waiver possible for small companies).
Legal form intended for small and medium-sized companies.

Minimum capital requirement

Stock corporation

Minimum stated capital of CHF100,000 (or an equivalent amount denominated in a foreign currency that is of importance for the business activity). When issuing registered shares, 20 percent of the share capital, but minimum of CHF50,000 (or, if the share capital is denominated in a foreign currency, an amount equivalent to CHF50,000 in the foreign currency) must be paid-in at the time of incorporation.

Legal liability

Stock corporation

Shareholders of a stock corporation are generally not liable for any debt or liability of a corporation, except for the payment of share price.

Tax presence

Stock corporation

A stock corporation is taxed at 2 levels (so-called economic double taxation). First, the stock corporation pays a corporate tax on its corporate income; when the stock corporation distributes profits to shareholders, they pay income tax on those dividends. Capital tax is only levied on a cantonal and communal level.

Incorporation process

Stock corporation

Incorporation meeting with the notary public; filing of the incorporation documents with the commercial register; registration of the stock corporation in the commercial register.

Business recognition

Stock corporation

Well regarded and widely used; more than 48 percent of the companies in Switzerland are organized as stock corporations.

Shareholder meeting requirements

Stock corporation

Required to hold annual general meeting of shareholders to vote on certain items, such as election of directors. The general meeting may be replaced by circular resolutions if all shareholders are represented and no shareholder requests an oral deliberation.

Board of director meeting requirements

Stock corporation

Annual meeting of the board of directors is required.

Annual company tax returns

Stock corporation

Must annually file tax returns with federal and cantonal tax authorities.

Business registration filing requirements

Stock corporation

Registration in commercial registry is required.

Business expansion

Stock corporation

No need to change as business expands.

Exit strategy

Stock corporation

Where the corporation is dissolved for reasons other than insolvency or a court judgment, the general meeting of shareholders passes a resolution; the board of directors subsequently notifies the dissolution for entry in the commercial register.

Annual corporate maintenance requirements

Stock corporation

Annual board of directors and general meeting of shareholders; annual report generally consisting of annual accounts and management report.

Director / officer requirements

Stock corporation

If there are several directors, one director must be appointed as chairman. The board of directors appoints a secretary (responsible for protocol of board of directors meeting and other administrative duties; not required to be member of the board or management). No requirement to delegate day-to-day management to officers, but articles of incorporation may authorize the board of directors to do so.

For more information on directors’ duties, see our Global Guide to Directors’ Duties.

Local corporate secretary requirement

Stock corporation

None required.

Local legal or admin representative requirement

Stock corporation

At least 1 director or officer with single signatory power or 2 directors or officers with joint signatory power by 2 must be resident in Switzerland.

Local office lease requirement

Stock corporation

None required, but in absence of local offices, a c/o address is required.

Other physical presence requirements

Stock corporation

Requirement to choose a domicile.

Sufficiency of virtual office

Stock corporation

Sufficient for incorporation; however, a written declaration by the holder of the domicile needs to be supplied confirming that they allow the stock corporation to have its domicile at the address stated.

Provision of local registered address by law firm or third-party service provider

Stock corporation

Possible.

Provision of local director or corporate secretary by law firm or third-party service provider

Stock corporation

No restrictions regarding the provision of local director or corporate secretary by law firm or 3rd-party service provider.

Nationality or residency requirements for shareholders, directors and officers

Stock corporation

At least 1 director or officer with single signatory power or 2 directors or officers with joint signatory power by 2 must be resident in Switzerland.

Restrictions regarding appointment of nominee shareholders or directors

Stock corporation

Generally none for nominee directors. In contrast, the stock corporation may (in case of registered shares with restriction of transferability) refuse entry in the share register where the acquirer fails to declare expressly that they have acquired the shares in their own name and for their own account.

Summary of director's, officer's and shareholder's authority and limitations thereof

Stock corporation

The board of directors is elected by the general meeting of shareholders and is the managing body. It has the authority to represent the stock corporation with respect to third parties and has certain non-transferrable duties that cannot be delegated to officers (eg, overall management, determination of the organization, organization of the accounting, financial control and financial planning systems, appointment, supervision and dismissal of officers and compilation of the annual report). Officers may be appointed by the board of directors to oversee day-to-day operations of the corporation.

Public disclosure of identity of directors, officers and shareholders

Stock corporation

Identity of directors and officers is publicly disclosed; identity of shareholders is generally not publicly disclosed, except for the identity of the first subscribers of shares upon establishment of a stock corporation or in capital increases, and the disclosure obligations pursuant to the Financial Market Infrastructure Act (FMIA) with regard to shares listed on the stock exchange.

Minimum and maximum number of directors and shareholders

Stock corporation

There must be at least one shareholder. No maximum number exists. For directors, the minimum number is one, while there is no maximum number.

Minimum number of shareholders required

Stock corporation

1 shareholder is sufficient.

Removal of directors or officers

Stock corporation

The general meeting of shareholders is entitled to dismiss the members of the board of directors.

Required and optional officers

Stock corporation

None required; any optional officer is allowed, if the board of directors is authorized to delegate powers in the articles of incorporation.

Board meeting requirements

Stock corporation

At least one annual board of directors meeting is required; circular resolutions are possible. Minutes need to be kept of the board's discussions and resolutions and signed by the chairman and the secretary.

Quorum requirements for shareholder and board meetings

Stock corporation

For shareholders' meetings, subject to certain decisions that require a qualified majority of 2/3 of the represented voting rights and an absolute majority of the nominal value of represented shares, no attendance quorum applies and resolutions may be taken with simple majority of represented shares. Further, a stock corporation's articles of incorporation may stipulate additional quorum requirements.

For board meetings, subject to a stock corporation's articles of incorporation and/or organizational regulations, no attendance quorum applies and decisions may be taken by simple majority of the cast votes.

Must a bank account be opened prior to incorporation, and must the bank account be local?

Stock corporation

In case of incorporation by cash, it is required to pay in the share capital in cash to a special blocked account to be opened with a Swiss bank before the incorporation meeting.

Auditing of local financials. If so, must the auditor be located in local jurisdiction, and must the company's books be kept locally?

Stock corporation

Auditors must audit the stock corporation's books annually and submit a report thereon to the board of directors and the shareholders. Waiver of audit is possible for small companies. Generally, the auditor must be located in Switzerland. The stock corporation's books must be kept locally.

Requirement regarding par value of stock

Stock corporation

The nominal value of a share must be larger than zero.

Increasing of capitalization if needed

Stock corporation

Effectuated by share capital increase (ordinary or conditional) to be reflected in articles of association, which requires a resolution or authorization from the general meeting of shareholders. In addition, the board of directors may be authorized in the articles of association to increase and/or decrease the share capital within a defined bandwidth (so-called capital band).

Summary of how funds can be repatriated from your jurisdiction (ie dividends or redemption)

Stock corporation

Free equity can be repatriated abroad from Switzerland via dividend or redemption. Withholding tax (35 percent) may arise.

Restrictions on transferability of shares

Stock corporation

Shares may generally be transferred freely. Board of director’s consent is only needed in case of registered shares and a corresponding provision in the articles of incorporation.

Obtaining a name and naming requirements

Stock corporation

The business name must indicate the legal form and must be clearly distinct from every other business name of businesses already registered in Switzerland. A reservation of a business name is not possible.

Summary of "know your client" requirements

Stock corporation

No general KYC requirements except for financial intermediaries and dealers, as defined in the Swiss Anti-Money Laundering Act.

However, reporting requirements regarding the identity of the owner of bearer shares and regarding the ultimate beneficial owner of shareholders holding more than 25 percent of the voting rights or capital in a stock corporation may apply to unlisted stock corporations.

Approval requirements for amending charter document

Stock corporation

Generally, the shareholders' meeting must formally approve a resolution to any amendment to the articles of incorporation.

Licenses required to conduct business in jurisdiction

Stock corporation

In general, no license requirements except for specific sectors such as, for example, banking and insurance.

Process of purchasing and utilizing a shelf company

Stock corporation

Although not uncommon in practice, purchase of a shelf stock corporation and its subsequent reactivation may be held void and involves various and substantial legal and financial risks. It is therefore not advisable under Swiss law.

Key contacts

Dr. Philippe Borens, LL.M

Partner Schellenberg Wittmer [email protected] T +41 44 215 5249 View bio

Corporate

Stock corporation

Stock corporation (Aktiengesellschaft, AG / Société Anonyme, SA)

Limited liability company (Gesellschaft mit beschränkter Haftung, GmbH / Société à Responsabilité Limitée, SARL)

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For more information on directors’ duties, see our Global Guide to Directors’ Duties.

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Dr. Philippe Borens, LL.M

Entity set up

Switzerland

Stock corporation (Aktiengesellschaft, AG / Société Anonyme, SA)

Limited liability company (Gesellschaft mit beschränkter Haftung, GmbH / Société à Responsabilité Limitée, SARL)