Research on Incorporating in Switzerland Common structure: limited liability company A Limited Liability Company (GmbH) is a distinct legal entity

in which two or more persons or companies come together in a new firm with predetermined nominal capital. Each member takes equity in the company by contributing to its capital, and the companys liability is limited to the amount of the registered capital. The GmbH is an attractive legal form for a company and is increasingly preferred over the AG by small and medium-sized companies. FORMATION PROCEDURE Similar with joint stock company, except: (1) Only two founders are required; (2) Nominal capital must be at least CHF 20,000 and may not exceed CHF 2 million. Setting up - Summary Generally, no approval from Swiss authorities is needed when setting up a business in Switzerland. As a foreign national, a work and residence permit is required, should you wish to re-locate personally to Switzerland. You could also run your Swiss business with Swiss nationals. Useful sources of assistance and information: The economic development agency of the selected canton. Banks, consulting firms and fiduciaries. Time required: The general time frame for company incorporation in Switzerland is between two and four weeks, beginning from the submission of the documents until the company becomes a legal entity. Should the Swiss Branch be founded as a single owner business, this can be initiated completely online via the new electronic system www.kmuadmin.ch (electronic registration - German and French only). Costs involved: The costs for establishing a corporation are comprised of the following (for a limited liability company, the fees and consulting costs are somewhat lower): Fees (registration, notary, registry of files) approximately CHF 2,000. Consulting and/or attorney fees from approximately CHF 2,000 to CHF 5,000 for smaller companies. Stamp duty: 1% of the nominal capital of which the first CHF 1 million is exempt. This exemption applies in general to newly formed corporations and for capital increases up to CHF 1 million. Existing companies now may increase their nominal capital up to CHF 1 million without share issue duty becoming due. Source: Greater Zurich Area, http://www.greaterzuricharea.ch

Research on Incorporating in Switzerland

In Switzerland there are three types of companies, which truly enjoy limited liability: the corporation limited by shares (socit anonyme or SA/ Aktiengesellschaft or AG) (the Corporation), the limited liability company (socit responsabilit limite or Srl/Gesellschaft mit beschrnkter Haftung or GmbH) (the LLC) and the Cooperative (socit cooprative/Genossenschaft). With a few notable exceptions, the Cooperative is nowadays rarely used in Switzerland to conduct profit-driven commercial activities as its capital and governance structure are generally ill-suited to this type of activity. The Corporation and the LLC are the most common forms of limited liability companies in Switzerland. These forms are widely used across all industries to conduct all types of profit-driven commercial activities, from a pure holding activity to heavy industrial production. The form of the Corporation is by far more prevalent than the form of the LLC. Due to a recent modernization of the provisions of the Swiss code of obligations governing the LLC, this form of company is becoming more popular. Because its governance structure is simpler than the governance structure of the Corporation, Swiss subsidiaries of large international groups are increasingly being structured as LLCs. Both the Corporation and the LLC have a stated capital divided in shares (for the Corporation) or in equity quotas (for the LLC), which will be referred to as the shares. Capital Requirements Swiss law requires the Corporation to have a minimum stated capital of CHF 100,000. At the time of incorporation, 20 per cent of the stated capital of a Corporation or CHF 50,000, whichever is higher, has to be paid up by the founders. There is no upper limit to the stated capital of a Corporation. Swiss law requires the LLC to have a minimum stated capital of CHF 20,000. At the time of incorporation, 20 per cent of the stated capital of an LLC or CHF 20,000, whichever is higher, has to be paid up by the founders. Swiss general corporate law does not provide for any thin capitalization rules. On the other hand, Swiss tax authorities will deny the deductibility of interests paid by a company to its shareholders to the extent the companys debt equity ratio exceeds a certain level. Such ratio will depend on the type of assets composing the equity of the considered company. However, specific rules provide for minimum capital requirements to financial institutions such as banks, insurance

Research on Incorporating in Switzerland companies and collective investment schemes. Minimum capital requirements also stem from Swiss listing rules.

Source: Lenz & Staehelin David Ledermann & Andreas Rtheli (pdf)