Overview of Legal Forms

FROM A TO Z

Overview of legal forms

Sole proprietorship* General partnership* Limited partnership* Limited liability company GmbH Joint stock company AG

Legal basis No separate regulation in OR OR 552–593 OR 554–619 OR 772 – 827 OR 620 – 763

Main purpose Small business, individual activities Permanent, highly individual business Special cases; eg, smaller companies that Highly individual business Suitable for almost all types of proﬁ t- (eg, artist) carry out a highly individual activity oriented company involving external partners Legal nature Sole proprietorship Business partnership Business partnership Legal entity, corporate body Legal entity, corporate body

Company name Name must include family name of owner Free choice (personal name, activity, fantasy Free choice (personal name, activity, fantasy Free choice (personal name, activity, fantasy Free choice (personal name, activity, fantasy general barrier: with or without ﬁ rst name description – provided name is available; description – provided name is available; description – provided name is available; description – provided name is available; prohibition of deception and public interest OR 945 see checklist company foundation p. 74). see checklist company foundation p. 74). see checklist company foundation p. 74). see checklist company foundation p. 74). OR 944 OR 944 OR 944 If the ﬁ rm contains other family names, The legal form must be indicated in the The legal form must be indicated in the it must be apparent which is the owner’s The legal form must be indicated in the The legal form must be indicated in the company (admissable: ‘Gesellschaft mit company (admissable: ‘Aktiengesellschaft’ family name. company (admissible: ‘Kollektivgesell- company (admissible: ‘Kommandit- beschränkter Haftung’ or abbreviation or abbreviation ‘AG’). OR 945 II schaft’ or abbreviation ‘KiG’). gesellschaft’ or abbreviation ‘KmG’). ‘GmbH’). OR 944, 950 OR 947, 950 OR 947, 950 OR 944, 950 possible additions: activity, fantasy description OR 944

Formation through Start of self-directed permanent gainful Conclusion of a company agreement Conclusion of a company agreement Notarisation of the incorporation, approval Notarisation of the incorporation, commercial trade, see comment 1, p 72 economic activity. form-free; ie, the general partnership can form-free; ie, the limited partnership can of the statutes, and, if applicable, determi- approval of the statutes, and, if applicable, originate without a written agreement. originate without a written agreement. nation of management and representation, determination of management and OR 552 OR 594 and the auditor (unless a waiver pursuant representation, and the auditor (unless to OR 727a II) . a waiver pursuant to OR 727a II) If no trade based on business is operated, If no trade based on business is operated, the general partnership is created only the limited partnership is created only Entry in commercial register Entry in commercial register with an entry in the commercial register. with an entry in the commercial register. OR 777-779 OR 629-643 OR 553 OR 595

Required number of One person is sole proprietor Two or more persons are partners One person is an unlimited partner (general At least one shareholder At least one shareholder owners or partners OR 552 partner) and at least one person or legal Shareholders may be individuals, legal Shareholders may be individuals, legal entity or commercial company is a limited entities or commercial companies. entities or commercial companies. partner OR 775 OR 625 OR 594

Required capital No restrictions No restrictions No restrictions Compulsory, registered capital deﬁ ned in Compulsory, registered capital deﬁ ned in the statutes, divided into ordinary shares the statutes, divided into ordinary shares Amount and share pursuant to Amount and share pursuant to with a minimum nominal value of CHF 100 with a minimum nominal value of CHF 0.01 OR 557 and 531 OR 557 and 598 OR 774 OR 622 IV The liability share of each limited partner Min: CHF 20,000, fully paid in Min: CHF 100,000, of which CHF 50,000 must be entered in the commercial register OR 773, 777c I must be fully paid in OR Art 608, 609 and HRegV 41 (2) lit g OR 621, 622, 632

HRegV = Commercial register regulations OR = Swiss Code of Obligations * In the case of individuals, the compensation fund is required to recognise self-employment from the point of view of social insurance. More information: www.gruenden.ch

1 OVERVIEWSTART-UP → OF from LEGAL A to FORMSZ Sole proprietorship* General partnership* Limited partnership* Limited liability company GmbH Joint stock company AG

Legal basis No separate regulation in OR OR 552–593 OR 554–619 OR 772 – 827 OR 620 – 763

Entry in commercial register Compulsory for company of a commercial Compulsory for a commercial trade Compulsory for a commercial trade Created with entry in commercial register Created with entry in commercial register nature with an annual turnover of OR 552 II OR 594 III OR 779 OR 643 CHF 100,000 or more HRegV 36 © 2017-03 Publisher / www.gruenden.ch Gründen © 2017-03 Required number of One person is sole proprietor Two or more persons are partners One person is an unlimited partner (general At least one shareholder At least one shareholder owners or partners OR 552 partner) and at least one person or legal Shareholders may be individuals, legal Shareholders may be individuals, legal entity or commercial company is a limited entities or commercial companies. entities or commercial companies. partner OR 775 OR 625 OR 594

2 OVERVIEWSTART-UP → OF from LEGAL A to FORMSZ Sole proprietorship* General partnership* Limited partnership* Limited liability company GmbH Joint stock company AG

Provision of assets instead of money Possible Possible Possible Possible, special procedure Possible, particular procedure OR 557, 531 OR 598, 557, 531 OR 777c II i. V. m. 628, 634 OR 628, 634

Organisations or bodies None Partners Partners – Shareholders’ meeting – Shareholders’ meeting – Management (with at least one member) – Board of Directors (with at least one Accountant/auditor can be used Accountant/auditor can be used Auditors can be used – Auditor if no waiver member) OR 727a II – Auditor if no waiver OR 804 ff . OR 727a II OR 698 ff

Liability/ Unrestricted liability of owner with personal Primary liability of the company’s assets Primary liability of the company’s assets Exclusive liability of the company’s assets Exclusive liability of the company’s assets additional obligation assets OR 794 OR 620 I, II Subsidiary unlimited and joint liability Subsidiary unlimited and joint liability of subsidiary = in addition to the company’s assets of each partner with personal assets each general partner with personal assets Optional limited additional contribution Shareholders required only to fully pay the if they are exhausted OR 568 OR 604 liability according to the statutes share capital attributable to their shares (paid-up) Subsidiary limited joint liability of each Amount of the additional contribution OR 680 limited partner (liability of share) liability associated with a pro rata share OR 608 must be speciﬁ ed in the statutes and may not exceed twice the nominal value of the share capital Liability only for the additional capital contributions associated with the company’s shares OR 795

Involvement of investors or Very limited opportunities for debt Through accession Through entry as a general partner or Receipt of debt capital by GmbH only It is advisable to establish an AG if a lot of third-party capital ﬁ nancing (normally loans from family OR 569 limited partner against personal liability of owner(s) external capital has to be absorbed OR 612 OR 781 OR 650 see comment 2, p. 72 members or friends) ff.

Pro t and loss transfer Fully with owner According to company agreement According to company agreement Shareholders are entitled to a share of the Shareholders are entitled to a share of the OR 557, 559 f. OR 598, 601 proﬁ ts according to the law and statutes proﬁ ts according to the law and statutes OR 798, 801 i. V. m. 660 ff . OR 660 ff .

Accounting law It is compulsory to keep bookkeeping and It is compulsory to keep bookkeeping and It is compulsory to keep bookkeeping and Yes Yes accounting records if in the last fi nancial accounting records if in the last fi nancial accounting records if in the last fi nancial OR 957 ff . OR 957 ff . year, sales revenue was ≥ CHF 500,000, year, sales revenue was ≥ CHF 500,000. year, sales revenue was ≥ CHF 500,000. Otherwise, only a record of income and Otherwise, only a record of income and Otherwise, only a record of income and expenditure and assets must be kept. expenditure and assets must be kept. expenditure and assets must be kept. OR 957 ff ., 558 OR 957 ff ., 598 II i. V. m. 558 OR 957–963b

Taxation Owner’s total income and assets from Each partner’s share of income and assets in Each partner’s share of income and assets in Company for profi t and capital Company for profi t and capital business and private sector the company, and private income and assets the company, and private income and assets For more information, Shareholders for share of assets and profi t Shareholders for share of assets and see www.gruenden.ch distribution as income dividends as income Foundation costs CHF 500 to CHF 2,500 CHF 2,500 to CHF 5,500 CHF 2,500 to CHF 5,500 from CHF 3,000 from CHF 3,000 (advice, notary, commercial register entry)

Management and representation By the owner or any designated person By each partner individually, unless Individually by each general partner, unless Management by all partners jointly, unless Management by the board of directors, otherwise regulated by resolution. However, otherwise regulated by resolution. However, otherwise regulated by statute unless delegated to an individual member at least one partner must be authorised to at least one general partner must be OR 809 I of the board of directors or to a third represent. authorised to represent. party by the organisational regulations Each managing director is entitled to OR 716 b Limited partners are neither entitled nor represent the company. Other signatories according to resolution obliged to manage the business of the Representation by each director individu- OR 563, 566 Representation may deviate from the company. ally, if not delegated through statute, statutes, but at least one managing director OR 600 I organisational regulation or a board of must be authorised to represent. directors’ resolution to individual board Other signatories according to resolution OR 814 f. members or third parties OR 599, 603/563 OR 718 I, II At least one member of the board of directors must be authorised to represent OR 718 III

3 OVERVIEWSTART-UP → OF from LEGAL A to FORMSZ Sole proprietorship* General partnership* Limited partnership* Limited liability company GmbH Joint stock company AG

Provision of assets instead of money Possible Possible Possible Possible, special procedure Possible, particular procedure OR 557, 531 OR 598, 557, 531 OR 777c II i. V. m. 628, 634 OR 628, 634

Management and representation By the owner or any designated person By each partner individually, unless Individually by each general partner, unless Management by all partners jointly, unless Management by the board of directors, Publisher / www.gruenden.ch Gründen © 2017-03 otherwise regulated by resolution. However, otherwise regulated by resolution. However, otherwise regulated by statute unless delegated to an individual member at least one partner must be authorised to at least one general partner must be OR 809 I of the board of directors or to a third represent. authorised to represent. party by the organisational regulations Each managing director is entitled to OR 716 b Limited partners are neither entitled nor represent the company. Other signatories according to resolution obliged to manage the business of the Representation by each director individu- OR 563, 566 Representation may deviate from the company. ally, if not delegated through statute, statutes, but at least one managing director OR 600 I organisational regulation or a board of must be authorised to represent. directors’ resolution to individual board Other signatories according to resolution OR 814 f. members or third parties OR 599, 603/563 OR 718 I, II At least one member of the board of directors must be authorised to represent OR 718 III

4 OVERVIEWSTART-UP → OF from LEGAL A to FORMSZ Sole proprietorship* General partnership* Limited partnership* Limited liability company GmbH Joint stock company AG

Transfer of membership No membership, whole or partial disposal By company agreement By company agreement OR 598 I; if no Written transfer of shares Free, as long as there are no legal or (exit, employee participation, etc.) of the business OR 557 I regulation in the company contract, OR 785 statutory restrictions on transfer with the consent of all partners OR 684 ff . see comment 3, p. 72 Unless stipulated otherwise by the statutes, If no regulation in the company agreement, OR 598 II with reference to OR 557 and 542 approval by the shareholders’ meeting with the consent of all partners (at least two thirds of the votes cast and an OR 557 II with reference to OR 542 absolute majority of the total share capital with which a voting right is exercisable). OR 786, 808b I no. 4

Nationality and residence regulations It is not necessary for the owner to be It is not necessary for the partners to be It is not necessary for the partners to be At least one managing director must be At least one member of the board of Residence and work permit domiciled in Switzerland. domiciled in Switzerland. domiciled in Switzerland authorised to represent. The company must directors must be authorised to represent. see comment 4, p. 72 be represented by a person domiciled in The company must be represented by Switzerland, who must be a managing a person domiciled in Switzerland, who director or a director. must be a member of the board of directors OR 814 II, III or a director © 2017-03 Publisher / www.gruenden.ch Gründen © 2017-03 OR 718 III, IV

Reporting obligations Obligation to notify the beneﬁ cial owner if The acquisition of bearer shares must be a share of more than 25% is acquired alone reported to the company within one month. or in a joint arrangement with third parties. OR 697i OR 790a Obligation to notify the beneﬁ cial owner if a share of more than 25% is acquired alone or in a joint arrangement with third parties. OR 697j

Directory and storage obligations Obligation to maintain a list of beneﬁ cially Obligation to maintain a list of shareholders entitled persons. Ten-year retention period. and beneﬁ cial owners. Ten-year retention Obligation to ensure access at all times in period. Obligation to ensure access at all Switzerland. times in Switzerland OR 790a i. V. m. OR 697l OR 697l

Comment Notes on sole proprietorships Notes for boards of directors and Notes on simple partnerships and 1 A self-employed economic activity that is geared 4 In order to work, foreign nationals require a work The sole proprietorship is the second most popular managing directors general partnerships towards permanent acquisition and which does permit and residence permit that authorises them legal form in Switzerland (after GmbH). Small rms in The board of directors of an AG and the managing The simple company is a legal entity and a partnership not necessarily require pro t making. to pursue their employment. Citizens from EU*/ the service sector (IT, hairdressers, practices, etc) and directors of a GmbH are obliged to ensure proper under Swiss law. According to OR 530, it is de ned as EFTA** member states require a valid residence small tradespeople and retailers (painters and 2 In addition to the legal forms of admission of organisation and management of the company. a contractual association between two or more permit (L or B EU/EFTA). First-time work permits decorators, fashion shops, etc) usually have this legal external investors, contractual options that move Violation of this agreement may result in personal persons in order to reach a common purpose with for non-EU/EFTA nationals are possible, provided form. between debt and equity also exist, such as liability. Therefore, ensure that you have regular joint forces or means. According to OR 530 (2), the they are quali ed workers or special reasons justify convertible and warrant-linked loans or loans with The assertion that one must establish a GmbH in order access to the required information. Compare the simple partnership is also negatively de ned as the an exception. Further information: www.sem. a performance-related interest rate. not to be personally liable should be taken with operations with the business plan/budget and take form of business that arises when the conditions for all admin.ch caution and should not be the sole reason to choose over if something goes wrong. other forms of business are not ful lled. If you The association GO! www.mikrokredite.ch or cantonal contact points. the legal form of GmbH. In practice, a founder of a “operate a trade, a manufacture or a trade of a enables nancing of up to CHF 40,000 for all Pay particular attention to the payment of AHV GmbH or an AG is liable for capital borrowed from commercial nature under a joint company” (OR 552), legal forms. contributions, since a more stringent personal liability banks with their private assets. This is contractually you become a partnership. * EU-28 member states: Austria, Belgium, Bulgaria, applies here. These duties and responsibilities may 3 Exit: in all forms the business operation can regulated by the banks and is independent of the legal Croatia, Cyprus, Czech Republic, Denmark, also include de facto bodies; that is, persons who are The general partnership lacks a legal identity and be disposed of through the transfer of assets and form. The decision on whether to take the form of a Estonia, Finland, France, Germany, Greece, not formally directors or managing directors, but have therefore the ability to act. The partners are primarily, liabilities. The takeover of assets or of the business GmbH should depend on how many people are Hungary, Ireland, Italy, Latvia, Lithuania, Luxem- a decisive in uence on the management of the unrestrictedly and solidly responsible for the debts of of general partnerships, limited partnerships, involved in the foundation or if it is indispensable for bourg, Malta, Netherlands, Poland, Portugal, company. the company. Keep in mind that if you choose no limited liability companies, joint stock companies, marketing purposes. If business does not go as Romania, Slovakia, Slovenia, Spain, Sweden, UK. other legal form and act jointly with others, you will cooperatives, associations, foundations and sole planned, a sole proprietorship can be liquidated more Text approved by MSM Group AG, Winterthur become a simple partnership or a general partnership. proprietorships registered in the commercial According to Protocol III on the free movement easily. Both can originate informally – that is, without a register is governed by the provisions of the Merger of persons, speci c maximum numbers and labour Text approved by GO! www.mikrokredite.ch written contract – by mere action; for example, by Regulation, OR 181 IV. market regulations apply to Croatian nationals means of a common name, joint stationery, or quotes concerning access to employment from 2017 until In other cases, OR 181 I, II and III (further liability of and invoices issued on behalf of the partnership. the probable end of 2023. the transferor) must be observed. For the transition Text approved by MSM Group AG, Winterthur of employment relationships, see OR 333 . ** EFTA member states: Iceland, Liechtenstein, Norway, Switzerland. Employee participation: options to the transfer of company shares (eg, equity) include, inter alia, agreements on bonuses and pro t sharing.

5 OVERVIEWSTART-UP → OF from LEGAL A to FORMSZ 6 START-UP → from A to Z Sole proprietorship* General partnership* Limited partnership* Limited liability company GmbH Joint stock company AG

5 START-UP → from A to Z 6 OVERVIEWSTART-UP → OF from LEGAL A to FORMSZ