Content - Capital companies

Capital companies

 

Note: the legal basis for corporate law in Switzerland is primarily set out in the Swiss Code of Obligations (CO)

Definition capital company

A capital company differs from partnerships inasmuch as the capital brought in to the company is more central than the individual bringing the capital (i.e. the shareholder).
Capital companies are legal persons whose rights as a legal person are acquired on entry in the commercial register. The company’s liabilities are covered by the company’s assets only.

In Switzerland, the Aktiengesellschaft (roughly equivalent to a corporation or a public limited company) and the Gesellschaft mit beschränkter Haftung (roughly equivalent to a limited liability company) belong to this legal form.

Aktiengesellschaft (AG)

The Aktiengesellschaft (AG) - roughly the equivalent to a corporation (corp.) or a public limited company (plc) - is a legal person with its own company name and a predetermined company capital which is divided into shares. In contrast to partnerships (general and limited partnership) the basis is not a partnership agreement, but the articles of association. Furthermore, the shareholders of an Aktiengesellschaft are not liable with their private assets.  

The main features of the AG are summarised below.  

  • The establishment of an Aktiengesellschaft calls for a formal, notarial incorporation process and requires at least one natural or legal person as a founder.
  • The Aktiengesellschaft acquires its legal personality upon its mandatory registration in the commercial register.
  • The minimum share capital for establishing an Aktiengesellschaft is CHF 100‘000 of which 20%, however at least CHF 50‘000, must be paid in. This can be done in cash or in kind.
  • Liability of the Aktiengesellschaft is limited to the share capital.
  • Participation of the shareholders in the company is not required. Their contribution is limited to payment of share capital.
  • The corporate bodies are the general meeting (Generalversammlung) as the supreme governing body, the board of directors (Verwaltungsrat) as the executive body and the auditors as the accounts-controlling body.
  • Unless otherwise stated in the Articles of Association or the Organisational Regulations, each member of the board of directors has power of representation. The board of directors can delegate the representation to individual board members (delegates) or to third parties (officers). At least one member of the board of directors must have the right of representation. The company must be represented by a person domiciled in Switzerland.
  • The articles of association of the Aktiengesellschaft must contain at the very least specifications about the company name and seat, purpose, share capital amount and the contributions paid in, number, nominal value and type of shares, calling to general meeting and shareholder voting rights, administrative and auditing bodies and form in which outbound notifications will be made.
  • Provided the general principles of name-giving are met, the name of the Aktiengesellschaft can be freely chosen. However, the legal form (AG) must be displayed in the company name.
  • An Aktiengesellschaft must keep company accounts. This means there needs to be a double entry bookkeeping with a balance sheet, an operating or profit and loss account and an inventory.
  • If an Aktiengesellschaft exceeds two of the three following thresholds in two consecutive years, an ordinary audit is required by law:   
    - balance sheet total of over CHF 20 million
    - revenues of over CHF 40 million
    - more than 250 full-time employment positions on annual average.
    A limited statutory audit applies to all other cases, unless a company has an annual average of less than 10  full-time positions and all of the shareholders consent to dispense with an audit

Gesellschaft mit beschränkter Haftung (GmbH)

The Gesellschaft mit beschränkter Haftung (GmbH) - roughly equivalent to a limited liability company (L.L.C) - is a legal person and a mixture between a person- and a capital-oriented company. The company capital is fixed in advance and divided into capital shares secured by the founders. Liability is limited to the company capital. In contrast to the Aktiengesellschaft, the shareholders have the right to manage and represent the company. The person-oriented nature of the GmbH is also reflected in the mandatory registration of the shareholders in the commercial register.   

The main features of the GmbH are summarised below:

  • The establishment of a GmbH calls for a formal, notarial incorporation process and requires at least one natural or legal person as a founder.
  • The GmbH acquires its legal personality upon its mandatory registration in the commercial register. 
  • The GmbH can be established and operated with one person.
  • The minimum company capital for establishing a GmbH is CHF 20‘000 which must be fully paid in, either in cash or in kind.
  • Liability is limited to the company capital.
  • The GmbH must be represented by a person domiciled in Switzerland, but who does not have to be a shareholder.
  • The corporate bodies of the GmbH are: shareholders‘ meeting (Gesellschafterversammlung) as the supreme governing body, the management board (Geschäftsführer) as the executive body and the auditors as the accounts-controlling body.
  • Each management board member is entitled to represent the company. Whereas the Articles of Association can stipulate representation otherwise, at least one member of the management board must have the right of representation. The company must be represented by a person domiciled in Switzerland
  • The articles of association of the GmbH must contain at the very least specifications about the company name and seat, purpose, company capital amount, capital share amount of each shareholder and form in which outbound notifications will be made.
  • Provided the general principles of name-giving are met, the name of the GmbH can be freely chosen. However, the legal form (GmbH) must be displayed in the company name.
  • A GmbH must keep company accounts. This means there needs to be a double entry bookkeeping with a balance sheet, an operating or profit and loss account and an inventory.
  • If a GmbH exceeds two of the three following thresholds in two consecutive years, an ordinary audit is required by law:
    • balance sheet total of over CHF 20 million
    • revenues of over CHF 40 million
    • more than 250 full-time employment positions on annual average
      A limited statutory audit applies to all other cases, unless a company has an annual average of less than 10 full-time positions and all of the shareholders consent to dispense with an audit.