In terms of business structures in Switzerland, the AG (Aktiengesellschaft) is the most common one, also known as the Swiss corporation or public limited company. A Swiss corporation can be formed by several individuals or legal entities and its capital is divided into shares. There are approximately 175, 000 Swiss corporations registered in Switzerland, a number that shouldn’t come as a surprise as this business structure offers certain advantages both for small enterprises in terms of liability and capital operations and for larger companies that conduct different types of business activities in Switzerland and abroad.
The shareholders of the Swiss corporation are only liable to the extent of their share capital in case of bankruptcy. At least one of a shareholder is required to form a Swiss corporation, which can be a natural person or a legal entity, including trading companies. The formation and procedure are more expensive and the required minimum share capital is higher than in the case of other business structures. Regarding the company name, this can be selected freely, provided that the name is not already taken.
The share capital of the Swiss corporation
The minimum share capital required to form a Swiss corporation is 100, 000 CHF, of which at least 20% (but no less than 50, 000 CHF) must be fully paid in upon registration. The rest of the capital can be paid in afterward, but at the latest in the case of liquidation or bankruptcy. The capital of the Swiss corporation can also be provided with contributions in kind, for example, real estate, machinery or other types of assets.
During the formation process, the paid in capital must be deposited into a bank account opened with a Swiss bank. The capital remains blocked until the company is registered and the registration is published in the Swiss Official Trade Journal. After the procedure is completed, the bank account becomes business account for the newly formed company or the sum is transferred to the company’s bank accounts.
There are no limitations regarding the number of the shareholders of a Swiss corporation and the shares can be bearer shares (the shareholders are anonymous) or registered shares. Registered shares are most often preferred so that the company maintains a degree of control over the ownership structure.
Auditing and financial reports
Swiss corporations have to be audited on regular basis and the audits must be performed by a certified and independent auditor. The auditors are appointed during the company formation process. An annual financial report is also submitted to the general meeting of shareholders. Ordinary audits are required for a Swiss corporation that fulfills at least two of the following conditions: the balance sheet exceeds 10 million CHF, the turnover exceeds 20 million CHF and the number of employees with full-time positions exceeds 50. If it’s not mandatory to conduct ordinary audits, limited audits suffice.
In addition, the company has to prepare a management report which includes an annual report and an annual account (profit, loss, balance sheet and additional information that meet the minimum legal requirements).
At least one shareholder constitutes the corporate executive board of the Swiss corporation. Legal entities can appoint representatives in the executive board, but they have to be Swiss residents. The executive board is the highest organizational and supervisory body of the Swiss corporation, but management can be handed over to third parties, which is what usually occurs.
The names of the members of the executive board are published in the Swiss Commercial Register and are liable for damages caused by intention or negligence while performing their duties.
Finally, the general meeting of shareholders is the highest body of a Swiss corporation and is responsible with specifying statues, selecting the executive board and auditors, approval or rejection of annual reports and deciding on the appropriation of corporate profit.