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Which legal forms exist in Switzerland?

The most common legal forms are the public limited company, Ltd. (AG), the limited liability company, LLC (GmbH), the general partnership, and the sole enterprise. This summary provides you with an overview of these four legal forms.

Overview legal forms

 

Public limited company, Ltd. (AG):

The public limited company, or Ltd. (AG), is an important and popular legal structure in Switzerland. Foreign companies often use this legal form when establishing a subsidiary. A Ltd. (AG) is a corporation with a legal entity whose liabilities are covered exclusively by its own assets. The base capital, determined in advance, is divided into shares. The Ltd. (AG) is not only the ideal structure for large companies, it is also suitable for small and medium-sized companies. It is the most commonly used legal form for holding and financial companies.

Requirements:

• Minimum capital: CHF 100,000.--
• Number of persons: at least one shareholder and one member of the board of directors, whereby these may be the same person.
• The majority of the members of the board of directors who are authorized to sign have to reside in Switzerland.

Advantages:

• Widely anonymous for investors
• No obligation for disclosure
• Limited liability
• Simple transfer of shares

Disadvantages:

• Costs
• Minimum capital

Limited liability company (GmbH):

A limited liability company, LLC (GmbH) is a company with its own legal personality formed by at least one or more individuals or companies with a predetermined capital (nominal capital). Each partner participates by paying in an initial share of the capital. The partner's liability is limited to the predetermined nominal capital.

Requirements:

• Minimum capital: CHF 20,000.--
• Number of Persons: at least one shareholder
• At least one executive director has to have his domicile in Switzerland

Advantages:

• Low minimum capital
• Limited liability

Disadvantages:

• Duty of publication of share transfers

General partnership

A general partnership consists of two or more natural persons who together form a corporation to run a trade, manufacturing, or other commercial business. All partners are jointly liable, with no limitations towards the company's creditors.

Requirements:

• Number of persons: a minimum of two natural persons.

Advantages:

• No minimum capital necessary
• Flexible circumstances of the business relationship (distribution of profit, activity)

Disadvantages:

• Jointly unlimited liability of the partners
• No unemployment compensation

Sole enterprise

One-man businesses usually engage in trade, manufacturing or commerce and have no legal personality. This legal structure is often chosen by young entrepreneurs wanting to establish a small business on their own. Anyone can start up a one-man business at any time and begin operations immediately. No dedicated seed capital is needed. However, the proprietor is liable for debts incurring from the one-man business with his personal assets.

A one-man business can easily be transformed into a limited liability company or a public limited company at a later point. It is the easiest legal structure to dissolve.

Main purpose of the sole enterprise:

• One-person businesses (painter business, hair dresser, artist, etc.)

Requirements:

• Number of persons: only one person can be the owner.
• Owner must have a domicile in Switzerland (no residency required)

Advantages:

• Enables uncomplicated, formless activity
• Not bound to company law
• No minimum capital required

Disadvantages:

• Unlimited liability of the owner with his private assets
• No partners can be added to the business
• No unemployment compensation

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