overview of The legal forms for a company formation

Find the best legal form for your business idea

Any person wishing to establish or restructure a company must choose a legal form. The information below will help you to choose the ideal legal form for your company.

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Overview of the legal forms

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The sole proprietorship

The formation of a sole proprietorship is uncomplicated and does not require any minimum contributions. Sole proprietorships are companies without their own legal personality. Many new entrepreneurs who set up a micro or small company choose this legal form for the beginning.

Minimum capital
  • No minimum capital required
Purpose of use
  • Suitable for one-man business (painter, hairdresser, artist etc.)
Number of persons
  • Only one person can be the owner
  • This person must have a domicile in Switzerland (however, there is no residence requirement)
Advantages
  • Enables uncomplicated, informal activity
  • Largely no compliance with company law provisions required
Disadvantages
  • Unlimited liability of the owner with the personal property
  • No partners can be involved in the company
  • No unemployment benefit

The limited liability company (LLC)

It is the most popular legal form in Switzerland: with a LLC, the personal liability of the shareholders can be excluded. The amount of liability is limited to the share capital. A LLC is a company with its own legal personality in which one or more persons form their own company. Each shareholder is liable up to the amount of his registered share capital.

Minimum capital
  • CHF 20'000
Purpose of use
  • Suitable for small and medium enterprises
Number of persons
  • At least one partner and one managing director, whereby one person may hold both positions
  • At least one authorised signatory managing director must be resident in Switzerland
Advantages
  • Lower minimum capital (CHF 20,000) than with an PLC
  • Exclusive liability of company assets
  • Participation is possible
Disadvantages
  • Obligation to publish the distribution of share capital
  • More regulations than partnerships
  • Double taxation

The public limited coporation (PLC)

Personal liability can be excluded with a public limited company. In addition, it enjoys a very good reputation among the public. A joint-stock company is a company with its own legal personality for whose liabilities only the company's assets are liable.

Minimum capital
  • CHF 100,000; at least CHF 50,000 must be paid up, i.e. paid in as a contribution
Purpose of use
  • Suitable for all profit-oriented companies
Number of persons
  • At least one shareholder and one member of the Board of Directors, whereby one person may hold both positions
  • At least one member of the Board of Directors must be resident in Switzerland and be authorised to sign.
Advantages
  • Anonymity of shareholders and investors
  • Exclusive liability with company assets
  • Simple transfer of shares
Disadvantages
  • High cost
  • Minimum capital requirements
  • Double taxation

The general partnership

If you wish to establish a company together with a partner, the general partnership can be the appropriate legal form. As with a sole proprietorship, no minimum contribution is required. A general partnership is a company in which two or more natural persons form a joint company for the purpose of commercial activity.

Minimum capital
  • No minimum capital required
Purpose of use
  • Suitable for small, strongly personalized companies with more than one partner (painters, small IT companies, etc.)
Number of persons
  • At least two natural persons; a partner must have a domicile in Switzerland (however, the partners are not obliged to reside in Switzerland)
Advantages
  • No minimum capital required
  • Flexible regulation of conditions (profit distribution, activity)
Disadvantages
  • Subsidiary (the partner is liable with his private assets if the company assets are not sufficient for the repayment of debts), unlimited and joint liability of each partner
  • No unemployment benefit

The association

The foundation of an association is uncomplicated and requires no minimum contributions. The association is a legal entity. An association that commercially operates a trade and / or is subject to auditing must register in the commercial register. Associations, which dedicate themselves to a political, religious, scientific, artistic, charitable, sociable or other non-economic task, are not obliged to do so. However, the statutes must in any case be available in writing and provide information about the purpose of the association, its means and its organisation.

Minimum capital
  • No minimum capital required
Purpose of use
  • Suitable for associations of persons pursuing a non-commercial trade or non-material task
Number of persons
  • Association of at least two persons
Advantages
  • Enables uncomplicated, informal activity
  • Largely no compliance with company law provisions required
  • No minimum capital required
  • The number of members may be limited
Disadvantages
  • May not be profit-oriented
  • Acceptance on the capital market
  • Compared to the general meeting of a PLC, the general meeting of the association has greater power in an AG.

The branch office

The establishment of a branch is straightforward and does not require any minimum deposits. The branch is a commercially run enterprise which is legally part of a principal enterprise on which it depends. The branch carries on a similar activity to the main company in its own premises and enjoys a certain degree of economic autonomy.

Minimum capital
  • No minimum capital required
Purpose of use
  • Suitable for a commercially run business wishing to carry on a similar activity at a location other than its head office
Number of persons
  • Persons entered in the commercial register may only have signing authority at the branch, but not at the head office
  • Persons who have authority to sign for the headquarters are not to be registered. These persons may also automatically sign for the branch
Advantages
  • Professional appearance of a further location of a company
  • Enjoy a certain economic independence
  • No minimum capital required
  • Low founding costs
Disadvantages
  • No limitation of liability to the branch office

The Foundation

With the establishment of a foundation, assets are made independent for a specific purpose. This means that it no longer belongs to the founder but to the foundation for a fixed period of time. The foundation is a legal entity chaired by the Board of Trustees. The foundation is established by a notarial deed or a will. With the exception of the family foundation and the church foundation, the foundation must be registered in the commercial register.

Minimum capital
  • For a foundation throughout Switzerland, the practice generally requires a minimum capital of CHF 50'000
Purpose of use
  • Making assets independent for a specific purpose
  • The foundation must be subordinated to a supervisory authority (except family foundation and church foundation).
Number of persons
  • According to current practice, the Board must consist of at least three natural persons or representatives of legal persons
  • At least one authorized member of the Board must be resident in Switzerland
Advantages
  • Good reputation and high credibility
Disadvantages
  • The statutes can only be changed with difficulty. This must be done by the supervisory authority at the request of the foundation board
  • As soon as the foundation has been established, it can no longer be revoked by the founder. Consequently, the founder no longer has any direct influence on the assets dedicated to the foundation

The cooperative

A cooperative focuses on the idea of promotion and economic self-help. The cooperative is also suitable for pursuing an entrepreneurial activity. The cooperative's «inner» corporate values, such as a clearly defined right of co-determination, speak in favour of the principle of the head vote and direct democracy. At least seven persons are required to found a cooperative, whereby the administration must consist of at least three members.

Minimum capital
  • If the amount of the initial capital has been agreed, each cooperative member must take over at least one share with a fixed nominal value
Purpose of use
  • Societies with a focus on promotion and economic self-help
Number of persons
  • At least seven natural or legal persons
  • The individual members of the cooperative are liable for the assets of the company
Advantages
  • No initial capital required
  • Clearly defined right of codetermination over the head voting principle
  • Transparency at all hierarchical levels (no wage excesses)
Disadvantages
  • The broadly supported right to have a say slows down decision-making processes and thus the cooperative's ability to act
  • Restricted access to the capital market, as the cooperative lacks the fixed share capital (insufficient credit basis)
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