Switzerland - League of Lawyers

Capital: Bern
Largest city: Zurich
Official Language: German, French, Italian, Romansh
Government: Federal semi-direct democracy under a multi-party assembly independent directorial republic
Area: 41,285 km2
Population: 8,570,146
Currency: Swiss Franc (CHF)
GDP total: CHF 526 billion (USD584 billion)
GDP per capita: CHF 60,908.15 (USD67,557)
Time zone: UTC +1/ UTC +2
Calling code: +41
Internet TLD: .ch / .swiss

[Source: Wikipedia]

No. of domestic companies: 1,148,533 as at March 2021*
No. of foreign companies: 13,231 as at December 2019**
[*Source: Swiss Federal Statistic Office. The number shown contains all active legal entities and associations in Switzerland and Liechtenstein, including Swiss domiciled companies held by foreigners
**Source: Swiss Federal Statistic Office, Foreign AffiliaTes Statistics (FATS). The number shown reflects the number of companies in Switzerland which are part of a foreign multinational group of companies. The number of Swiss companies held by foreigners is significantly higher, but no official statistics are available.]

Principal Legislation governing Companies

Swiss Civil Code
Swiss Code of Obligations

Q&A on Company Law

What are the different kinds of legal entities available in Switzerland?
There are a variety of legal entities available in Switzerland. The most common legal entities are the company limited by shares (Ltd., also, less commonly, combined with elements of a limited partnership) and the limited liability company (LLC). Furthermore, Swiss law offers the simple partnership, the collective partnership, the limited partnership, the cooperative, the association and the foundation.
Due to structuring, flexibility and liability limitation reasons, the Ltd. and LLC are the preferred legal entities for international corporate structures. Therefore, we will focus on the Ltd. and the LLC in this Country Guide.
What are the laws and regulations governing legal companies in Switzerland?
There is no general regulatory authority governing foreign investments and neither are there any significant investment reporting obligations. Regulatory bodies are competent for certain regulated business areas irrespective of an investment’s origin, for example, in the areas of banking, financial services and insurance, telecommunication, transport, energy, aviation, gambling, military equipment, and precious metals.
What are the procedures and requirements for incorporating or registering a company in Switzerland?
Save for the simple partnership and, under certain conditions, the association, all Swiss legal entities must be registered with the competent commercial register at the legal entity’s registered office.
The minimum share capital of a Swiss Ltd. is CHF 100,000, out of which at least CHF 50,000 must be paid-in. The minimum capital of a Swiss LLC is CHF 20,000. The contribution may be made in cash by deposit of the amount to a blocked account at a Swiss bank, or by contribution in kind, i.e. by assets with a validation as approved by an accredited Swiss auditor.
Every Swiss company is required to have its registered main office in Switzerland, as well as be represented by at least one board member, director or signatory resident in Switzerland ( Swiss nationality is not required).
Both the Ltd. and the LLC are incorporated by public deed, approving the articles of incorporation as well as appointing the first directors of the company. The public deed, together with the mandatory annexes, are then sent to the competent commercial register for approval and registration. The company is incorporated upon registration with the commercial register.
What are the reporting requirements for companies in Switzerland?
Any changes to facts registered in the commercial register must be reported. That includes, for example, members of the board and executive board, further authorised signatories, powers of signatories, the company’s auditors, the registered address, the articles of association, etc.
Financial statements must be filed with the tax authorities for tax purposes, but not with the commercial register. Consequently, a company’s financial statements are (save for companies registered at a Swiss stock exchange) non-public.
A Ltd.’s shareholders do not need to be reported to the commercial register and, consequently, are not publicly visible. In contrast, LLC owners must be reported to the commercial register and are, therefore, visible to the general public.
What are the procedures and requirements for foreigners and/or foreign companies to establish a company or business in Switzerland?
The procedures for a foreigner to establish a company in Switzerland are the same as for Swiss nationals.
What are some of the challenges that foreign companies should take into consideration prior to entering the industry or market in Switzerland?
Firstly, Switzerland is a federation with 26 districts, so-called Cantons. The Cantons are basically competent to set rules for their territory, unless a certain matter is governed nationwide by the federation. The result is that for certain industry sectors and subject matters, the laws of each Canton apply (for example tax law, construction law, most public matters like water, energy, etc.), with significant differences from Canton to Canton, which must all be given due consideration.
Secondly, Switzerland is divided into three language regions: Central, Northern and Eastern Switzerland are German speaking (around 70%), Western Switzerland is French speaking (around 25%), and Southern Switzerland is Italian speaking (around 5%). The dominant language of the respective Canton defines the official language, therefore there is no common official language for all Cantons.
Thirdly, Switzerland is not a member state of the European Union or the European Economic Area. Therefore, Swiss laws take European Union laws into due consideration, but are still set independently. However, thanks to various treaties with the European Union, full market access to Europe is guaranteed for most sectors.
What are the duties, responsibilities and liabilities of directors in Switzerland?
The Board of Directors is composed of one or more members, who are allowed, but not obliged to be shareholders. The directors are, in any case, entitled to attend shareholders’ meetings and to propose a motion. There are no restrictions as to the nationality of the directors.
Directors are elected by the shareholders’ meeting for a period not exceeding 6 years. They are eligible for re-election unless the articles of association provide otherwise.
Directors are authorised to decide all issues not being reserved or delegated to the shareholders’ meeting or other officers of the company. The directors are entitled to appoint attorneys and other agents of the company unless the articles of association provide otherwise. The company may also freely choose its executive personnel such as managers and other officers.
The directors are liable to the company, its creditors and the shareholders for any damage caused by wilful or negligent conduct in the performance of their duties. The release granted by the shareholders’ meeting at the end of a financial year discharges the directors from their liability with respect to facts and operations known by the shareholders voting for such release.
What are the requirements or criteria to be satisfied for an individual to qualify as a director of a company?
Any person having the legal capability to act and has attained the age of at least 18 years is eligible to act as a company’s director. However, and with respect to a director’s duties, it is advisable to elect (and for the elect to accept) persons with reasonable and specific business and management knowledge only.
Legal entities cannot be elected as a director of a Swiss company. However, the shareholders may agree to elect a physical person as a delegate of the legal entity, taking into due consideration that even such a delegate is required to seek the best interest of the company only (and not any shareholder’s personal interest).
What are the requirements or criteria to be satisfied for an individual or a legal entity to qualify and be a shareholder of a company in Switzerland?
A shareholder is only subject to the obligation to pay for his or her subscribed shares. Duties of loyalty, non-competition etc. do not apply to shareholders of a Ltd., and of a LLC only to the extent as stated in the LLC’s articles of association. However, such additional duties may be agreed upon between shareholders on a contractual basis (shareholders’ agreement).
How are shares in a company allotted and/or offered in Switzerland?
Shareholders in non-listed companies are free to transfer their registered shares, whether by assignment or by handing over share certificates issued by the company – bearer shares are less common and about to disappear shortly. Upon transfer, the new shareholder must announce the transfer to the company’s board of directors, who will then register the new shareholder in the company’s shareholders’ register.
Companies may (and most companies do) restrict share transferability by making transfers subject to approval by the board of directors, which approval might be refused for any reason if, in turn, the shares are bought by the company for their real value.
For companies listed at a Swiss stock exchange, more or less aligned international stock exchange standards apply.
What are the corporate governance practices in Switzerland?
Some of the most important practices include the separation between operational and strategic management, the importance of the shareholder’s position of power and the disclosure of corporate governance in the annual report of listed companies.
Who are the regulators for corporate governance in Switzerland?
There is no specific law regulating the corporate governance practises in Switzerland. However, the Swiss business federation Economiesuisse’s guideline “Swiss Code of Best Practice for Corporate Governance” and the Corporate Governance guidelines of Six Swiss Exchange are the most known in the country.
What are the taxes that apply to companies in Switzerland?
For the moment, a one-time federal duty (stamp tax on the issuance of shares) of 1% is payable on the capital and reserves of a newly formed corporation and on the amount of any subsequent capital increase, provided such capital and reserves exceed the tax exemption limit of CHF 1 million. However, this stamp duty will be abandoned in the next few years.
The Ltd. and LLC are subject to profit tax and share capital tax. The share capital tax is deducted against profit tax, i.e. it applies only in case none or only little profit tax is due by the company. Profit tax rates are fixed at 7.8% at federal level, but vary from Canton to Canton (lowest approx. 4.5%, highest approx. 16%). Therefore, the overall company profit tax is between 12% and 24%.
The sale of goods and services for Swiss recipients are further subject to Value Added Tax (currently 7.7%, resp. 2.5% for food and non-alcoholic beverages).
Finally, distribution of dividend payments to shareholders are subject to a 35% withholding tax, which, however, can be claimed back by the recipient (entirely for Swiss residents, partly for residents in a state with a double tax treaty).
Are companies in Switzerland subject to competition laws and regulations in Switzerland?
Yes, companies in Switzerland are subject to competition laws and regulations. Market-dominant companies are subject to a special legal scrutiny in this regard.
What are the data privacy laws in Switzerland that companies should be aware of?
The Swiss Federal Act on Data Protection (FADP) is the main source of data privacy laws in Switzerland. It is strongly influenced by the European General Data Protection Regulation (GDPR). Companies in compliance with GDPR will require only a little extra effort to comply with FADP.
What are the company insolvency laws and regulations in Switzerland?
In the case of the insolvency of a Swiss company, the Federal Act on Debt Enforcement and Bankruptcy applies. Insolvency law principles basically follow European standards, with different procedures depending on the reconditioning potential and/or the remaining assets of a company.
Have there been any recent reforms or regulatory changes pertaining to the company law in Switzerland?
Probably the most significant reform is the ongoing revision of the stock corporation law. The changes are expected to come into force in early 2022 and aim to modernize Swiss company law, bringing more flexibility and the opportunity for companies to profit from the use of digital means.
What are the main changes with company law in Switzerland that differ to company laws in other European countries?
Switzerland is neither a member state of the European Union (EU) nor part of the European Economic Area (EEA). Therefore, Swiss law is set independently. Switzerland is also not obliged by treaty to adopt the relevant EU secondary legislation in the area of company law. However, due to the commercial and economical dependency of Switzerland on the EU, Swiss legislation intends not to materially differ from the company law principles of other European jurisdictions.
In light of the Covid-19 pandemic and various governmental movement control orders in Switzerland, has the Swiss government implemented changes or temporary orders to assist companies to cope with financial constraints?
Swiss government has implemented various options for companies to cope with financial constraints. Firstly, companies can apply for short-time compensation for their employees. Furthermore, companies that had to close for business due to restrictions (e.g. restaurants, shops, etc.) are allowed to file for compensation. There is also a “hardship program” in place that intends to cushion the severe consequences for certain companies.

ABOUT THE AUTHORS

Bruno Hunziker
Partner, GHR Rechtsanwälte AG

Bruno Hunziker’s practice focuses on corporate/M&A, real estate transactions (including works contracts and Lex Koller regulation on the acquisition of real property by persons abroad), as well as private clients (immigration and residence permits). He specializes in matters relating to the planning, development and construction of hotel and resort complexes and hybrid hotel and facility management projects. Bruno Hunziker represents domestic and foreign corporations as well as private individuals. He also acts as board member in various companies.

Stephan Hofer
Senior Associate, GHR Rechtsanwälte AG

Stephan Hofer’s practice focuses on national and international transactions and corporate structuring. He also advises Swiss SMEs and government organizations on privacy and data protection. By teaming up with IT and other professionals in the digital sector, he is able to provide holistic solutions to clients’ matters. Stephan Hofer also advises on contract and financial markets law.

ABOUT THE FIRM

Name: GHR Rechtsanwälte AG
Address: 1. GHR Rechtsanwälte AG, Tavelweg 2, P.O. Box, 3074 Bern Muri, Switzerland. 2. GHR Rechtsanwälte AG, Seidengasse 13, P.O. Box, 8008 Zurich, Switzerland
Telephone: +41 58 356 50 50
Email: info@ghr.ch
Website address: www.ghr.ch
Key contact: Mr. Bruno Hunziker, Founding Partner, brunohunziker@ghr.ch
Established: 1992
Number of lawyers: 11
Languages: English, German, French

Brief description:
Founded in 1992 and registered as a corporation since 2000, GHR is a leading Swiss independent full-service business law firm with a proven track record and market recognition in corporate/M&A and other key areas of business law. From our offices in Bern and Zurich, we provide legal services to local and global clients, regardless whether they are small private business enterprises or multinational corporations, public sector organizations or individuals. As a member of three major independent law firm networks and with strong relationships with some of the world’s leading law firms, we have access to top tier legal advice worldwide.

Key practice areas:
Banking & Finance, Capital Markets, Commercial/Trade, Dispute Resolution and Arbitration, Corporate/M&A, Employment and Social Security, Energy and Natural Resources, Insolvency and Restructuring, Private Clients, Real Estate, Tax.