- The Swiss corporation – a short guide
One of the most widely used business structure in Switzerland is the corporation. A Swiss corporation (known as AG in German or SA in French) has the legal structure of a joint-stock company. The Swiss corporation is often used as a business structure by foreign companies who conduct business operations in Switzerland through subsidiaries.
The Swiss corporation is a distinct legal entity under Swiss law and its liability is often limited only to its assets. The company’s capital is determined before the registration process and it divided into shares. This type of company has the legal obligation to conduct annual independent audits and structure its financial account in accordance with the Swiss legislation.
To register a Swiss corporation, it is required to have a signed capital of minimum 100,000 CHF, from which 20% or at least 50,000 CHF must be paid up during the company’s registration procedure. An important advantage of the Swiss corporation is that the company’s shareholders have the right to remain anonymous, if they wish so. Foreign entrepreneurs can be shareholders in a Swiss corporation; however it is required for the company to have at least one director that is a Swiss resident.
Main advantages of a Swiss corporation
- The liability of the company is limited to its assets;
- The shareholders can remain anonymous;
- Inheritance of shares is made through a simple process;
- The annual financial statements must be published only if the Swiss corporation is listed on the stock exchange or has outstanding bonds;
- It is a suitable business structure for holding companies.
Disadvantages of the Swiss corporation
The most important disadvantage of this type of business structure is the fact that it requires quite a large amount for the minimum paid up capital.
Swiss corporation formation steps
The Swiss corporation must have at least three shareholders, from which one must be a Swiss national and a resident of Switzerland. However, it is possible to hold shares in a trust by third parties. Although it is required to have at least three holders for the company formation, the founders are allowed to withdraw after the founding procedure. It is not uncommon to have a Swiss corporation with just one shareholder.
The next step is to draft the articles of incorporation, to establish the governing bodies of the Swiss corporation and to pay up the minimum required share capital.
The founding procedure is ended after the Swiss corporation is registered in the commercial registry and the entry is published in the Swiss Commercial Gazette.
Governing bodies of the Swiss corporation
The highest governing body of the Swiss corporation is the General Meeting of Shareholders, which has the most important powers. This includes defining and modifying the articles of incorporation, electing the board of directors, choosing the company auditors and approving the annual balance sheet and income statement. The general meeting of shareholders is also responsible with deciding the distribution of profits and ratifying or approving the decisions of the board of directors.
The board of directors is the managing body of the Swiss corporation and it consists of one or more members that are also shareholders. The majority of the board must be composed of Swiss citizens or European citizens that are residents of Switzerland. Exceptions are allowed in the case of holding companies. In either case, at least one of the company’s representatives must be a Swiss resident.
Lastly, the statutory auditors are in charge with examining the accuracy of the annual financial statements and report to the board of directors or to the shareholders at the annual general meeting. Auditors must be certified and independent.
