Limited companies may be formed by one or more natural or legal persons (Articles 620-763 of the Swiss Code of Obligations). The shareholders contribute a certain amount of capital divided into fractional shares.
The SA (Société Anonyme), also known as an “AG” or “PLC”, is one of the most common legal forms in Switzerland as they offer many benefits to small businesses in terms of liability, capital regulation, etc. A limited company is liable only for its assets; therefore, the shareholders do not lose their capital in the event of bankruptcy.
Shareholders’ agreements clarify the situation when there are multiple stakeholders in a company. The minimum number of shareholders is one when establishing an SA. The company may be a natural person or a legal entity.
A limited company is formed by registering the company in the trade register, having the establishment notarized, approving the articles of association, appointing the board of directors, and getting a verification certificate from the supervisory body.
As long as the company name is not already in use by another company, it may be chosen freely however, the suffix “SA” must be included.
A double taxation system
When it comes to SAs, the tax authorities differentiate between commercial and private taxpayers. As with any other person, the SA is a legal entity and is taxed separately. If a company makes a profit, it must pay corporate income tax. Once it pays its shareholders dividends from these earnings, the shareholders must declare these dividends as income. Double taxation occurs in this situation.
Similarly, the company’s share capital is taxed twice: the company pays tax on it, and the shareholder declares it as personal property.
Due to the second corporate tax reform, double taxation has been reduced to a lesser extent.
Capitalization of shares
(Art. 621-622, Swiss Code of Obligations) The minimum capital requirement for the company is CHF 100,000. At least 20% must be paid up (discharged), but at a minimum of CHF 50,000 (Article 632 Swiss Code of Obligations). Share capital does not necessarily have to be paid in cash. Benefits in kind can be provided in the form of real estate, machines, etc.
A bank account must be opened by the founders of the limited company when the company is formed. The capital of the company being formed should be deposited into this account while the company is being registered with the trade register. The money is paid into a deposit account, where it remains frozen until the trade register reflects that the company was created. An applicant who wants to open a deposit account with a bank must submit a certified copy of his or her identification or a certified signature.
Following the company’s creation, the funds are transferred to the company’s current account, and the deposit account is closed.
The company’s share capital can be invested freely by multiple shareholders. It can be in the form of bearer or registered shares, which must have a nominal value of at least one cent.
Since 1 July 2015, holders of bearer shares (or participation certificates) are required to register within one month. Furthermore, if the amount of their investment amounts to more than one quarter of the company’s shares or votes, they must state who the beneficial owner of the investment is.
Organizations’ administrative and management bodies must keep an up-to-date list of bearer shareholders and beneficial owners.
Owners of registered shares are named on the share itself. Also, the person must be on the share register of the company. Shares registered with a company become the property of the buyer upon endorsement by the seller and registration in the share register.
By issuing shares with extended voting rights, the founders also have the power to influence the SA. A founder’s share is a share with a lower nominal value but full voting rights. As a result, a shareholder holding 1,000 shares with a nominal value of CHF 10 may have more voting rights than 100 shareholders holding shares worth CHF 100 each, even though both of them have received the same amount.
Members of the Board of Directors
As a representative of the company, the Board of Directors acts on behalf of the company. Each member of the Board of Directors represents the company unless otherwise specified in the articles of association or the regulations.
However, one or more of the Board’s members (officers) or third parties (directors) may be assigned representation powers.
The SA is primarily managed and governed by the Board of Directors. Under the Swiss Code of Obligations, the Board of Directors manages the company itself or delegates its management to a third party (as is typically the case). Nevertheless, the Swiss Code of Obligations establishes seven primary obligations that the Board of Directors may not subcontract or transfer (Article 716a).
In the trade register, you can find the names of the members of the Board of Directors. In the case of damages caused by negligence or intentional dereliction of duty, they are personally liable.
In recent years, corporate governance has become increasingly important, even for SMEs. In this case, it refers to how a company is managed – or should be managed.
Report of management and statutory auditor
The statutory auditor of a limited company must be appointed when it is incorporated. A report on the management of the company must be submitted every year to the Board of Directors.
Public limited companies are required to submit an annual management report, which includes the annual report and financial statements. Each annual financial statement comprises an income statement, a balance sheet, and accounting notes that have been prepared according to the Swiss legislation. These documents must reflect the company’s assets and earnings, valued as accurately as possible.
Meeting of the General Assembly
An SA’s primary body is the Annual General Meeting of Shareholders. In addition to determining the articles of association, the General Meeting elects the Board of Directors and the statutory auditor, approves or rejects the annual report, and determines how the company earnings are used. The Board of Directors must convene the General Meeting immediately in the event of a loss on the balance sheet. In case of insolvency, the Board of Directors – or the statutory auditor – must notify the court.