There are several ways to incorporate a stock corporation (AG) in Switzerland. In this blog post, you’ll learn what you need to keep in mind. We’ll walk you through the necessary steps and explain how to set up an AG and which legal requirements you must comply with.
A brief overview of the requirements for incorporation: An AG may be incorporated by one or more individuals or legal entities. The minimum share capital required to incorporate an AG is 100,000 Swiss francs. Of this amount, at least 20 percent—but no less than 50,000 Swiss francs—must be actually paid in.
7 Steps to Forming a Corporation
The Process of Forming a Public Limited Company (AG) in Switzerland
- Determining the Company Name
- Incorporation Documents & Payment of Share Capital
- Notarization
- Entry in the Commercial Register
- Registration with Social Security Agencies
- Taking Out Accident Insurance
- VAT Registration
1. Determining the Company Name
The first step in forming a stock corporation in Switzerland is choosing an appropriate company name. The name should be concise and attract the attention of potential customers. The name of the new corporation must be unique and must not lead to confusion with any other existing company. Furthermore, the name must not be misleading and must comply with the guidelines of the Commercial Registry.
2. Incorporation Documents & Payment of Share Capital
The documents required to form a stock corporation (AG) must be carefully prepared. These include, for example, the articles of incorporation. The share capital must also be paid in before going to the notary. In addition, an auditing firm must be selected.
2.1 Bylaws
The articles of incorporation must be clear and must not infringe on the rights of third parties. They also specify the rights and obligations of shareholders and members of the board of directors. The organizational structure of the corporation is also set forth in the articles of incorporation.
2.2 Payment of Share Capital
To form an AG, a share capital of at least 100,000 Swiss francs is required. This must be paid in before the AG can be formed. The legally required initial capital is at least 20% of the share capital. However, this amount may not be less than 50,000 Swiss francs.
The capital must be paid in cash or in the form of contributions in kind. The value of the contributions in kind must be determined by an auditor. If the contribution is made in cash, it must be deposited into a blocked account at the bank, known as a capital contribution account. For notarization purposes, the bank must issue a confirmation of the deposit.
2.3 Additional Documents
Depending on the circumstances, additional documents may be required to form the AG. These include, for example, the Stampa Declaration, the Declaration of Domicile, or the Lex Friedrich Declaration.
2.4 Appointing an Audit Firm
A stock corporation (AG) is required to undergo an audit. Therefore, an auditing firm must be selected at the time of incorporation. This firm reviews the corporation’s financial records. The auditor also verifies compliance with legal requirements.
3. Notarization
Once all the documents are prepared, the next step is to visit the notary. All founding members must be present for this visit. The shareholders may also be represented by proxies with a power of attorney. During this appointment, the articles of incorporation are drawn up. In addition, the founders’ signatures are notarized.
4. Entry in the Commercial Register
After the documents have been notarized, the corporation must be registered with the Commercial Registry Office. It is important that all required documents be completed fully and accurately. If this is not the case, the registration may be rejected.
5. Registration with Social Security
Another important step in forming a stock corporation is enrolling in a compensation fund and setting up a retirement plan. These entities are responsible for the social security of employees in Switzerland.
6. Taking Out Accident Insurance
Another requirement is to enroll in workers’ compensation insurance. This insurance protects employees from the consequences of workplace accidents.
7. Registration for Value-Added Tax
Finally, the company must register for value-added tax. This can be done directly online through the Federal Tax Administration. As soon as the company reaches 100,000 Swiss francs in revenue, it is subject to value-added tax. This means it must pay tax on all services provided.
Forming a Corporation: Advantages
The AG is one of the most popular legal structures for businesses in Switzerland. It is particularly common among larger companies, but it is also suitable for smaller companies.
Founding Shareholders
The AG is particularly flexible when it comes to the requirements for founders. For example, an AG can easily be founded by a single person. This person can be either a natural person or a legal entity. Several people (both natural persons and legal entities) can also join together to form a stock corporation in Switzerland.
Liability in a Corporation
Unlike many other legal forms, in which shareholders can be held personally liable, a corporation is liable for its debts as a separate legal entity. This means that shareholders are not personally liable if the corporation runs into financial difficulties.
However, this does not apply to the management and the supervisory board. They may be held liable without limitation for criminal or negligent conduct.
Capital and Non-Cash Contributions
The initial capital required to establish a corporation (AG) is relatively high. However, it does not have to be paid entirely in cash. Instead, contributions in kind can be made to cover the costs. These include both tangible assets (such as real estate or vehicles) and intangible assets (such as patents or licenses).
Simplified Capital Raising
A public corporation is subject to strict regulations and laws. For example, its annual financial statements must be published, which is why a public corporation is a transparent legal form. This helps build public trust and ensures compliance with high quality standards. This makes a public corporation particularly attractive to investors.
Disclosure of Shareholder Information
The names of the shareholders do not have to be entered in the commercial register. The ownership structure of the AG is therefore not publicly available. This protects the privacy of the shareholders and simplifies the sale of shares.
Disadvantages of a Corporation
While the corporation has some unique advantages, it also has some disadvantages.
A Complex Start-up Process
Forming a corporation is a relatively complex process. As a general rule, it is advisable to seek professional assistance. For example, a lawyer, a trustee, or even a bank can help with drafting the documents.
How much does it cost to form a corporation?
When starting a business, it is generally advisable to seek advice from a professional. The cost of this can be up to 4,000 francs. In addition, there are notary fees of up to 2,500 francs. Registration in the commercial register also typically costs about 600 francs.
In addition to the administrative costs, the share capital must also be paid in. This must amount to at least 100,000 Swiss francs. To incorporate a stock corporation, 20% of the share capital must be paid in. However, this amount may not be less than 50,000 Swiss francs.
For more information on how much it costs to start a business, see our guide.
Double Taxation
Another disadvantage of the corporation is double taxation. Under this legal structure, both the corporation’s capital and its earnings are taxed. In addition, the shareholders’ assets and income (dividends) are also subject to taxation.
Are you planning to form a GmbH instead? The process of forming a GmbH is similar to that of forming an AG. You can find more information on this in our guide.