Which form should you choose for your company in Switzerland?
The choice of the right company form depends on many factors. Here is an overview of the different company forms and their consequences on the legal situation of their founders.
Swiss law distinguishes between partnerships, which do not have legal personality, and corporations, which have legal personality. This distinction has given rise to three distinct categories of companies:
- Partnerships: these are simple partnerships, as well as general partnerships and limited partnerships. The latter two have a “quasi-personality”. They have their own patrimony, even if the partners’ patrimony remains subject to the risks of the company, and this in a limited way as far as the limited partners of the limited partnerships are concerned.
- Corporations are essentially public limited companies, limited liability companies and partnerships limited by shares.
- Cooperative societies. Cooperative societies have characteristics inherent to both partnerships and corporations.
Partnerships: fewer formalities, more personal liability
The formalities for the formation – by simple contract – and the rules governing the management of partnerships are much less restrictive and complex than those governing corporations.
This is logical. In partnerships, the partners are personally liable for the debts of the company, and this in an unlimited manner. They therefore directly commit their own assets to cover any debts incurred by the company.
However, there are differences between partnerships:
- the simple partnership has no assets of its own
- general and limited partnerships have such assets, which are used primarily to pay the debts of the partnership. Only in the absence of sufficient assets will the partners be liable, if at all, to a limited extent.
Capital companies: more rules, less personal liability
In contrast to partnerships, corporations have their own assets, which are the sole pledge to creditors. The partners therefore only commit their own assets to the extent of their contribution.
– The public limited company is the most common form of corporation. This form of company meets the needs of high capital since it must have a minimum capital of CHF 100,000 (of which 20%, with a minimum of CHF 50,000, must be paid up at incorporation). It is the preferred form for entrepreneurs wishing to operate a significant commercial activity. It also has the advantage of being able to be constituted by a single partner, of being easily transferable and of guaranteeing the anonymity of the partners.
– The limited liability company (SàRL) only requires a minimum capital of CH 20,000. The incorporation formalities and management rules of the limited liability company are less complex than those of the joint stock company, but it does not guarantee the anonymity of the partners.
– The limited partnership with shares has the particularity to include two types of shareholders. The general partners are jointly and severally liable partners. The limited partners, for their part, only commit a specific amount. Essentially, the rules of management and constitution of the limited partnership with shares are those of the joint stock company.
Cooperative societies: a hybrid formula
Finally, the cooperative company is the one formed by a variable number of persons or commercial companies, organized corporately, and which pursues the main goal of promoting or guaranteeing, through a common action, the specific economic interests of its members.
What to choose?
Each of these types of companies responds to specific needs and objectives. The person wishing to pursue his activity or to associate with other entrepreneurs pursuing similar objectives must therefore take particular care in choosing between the different forms of companies offered by Swiss law. Consulting a specialist will allow project holders to make an informed decision as to the best form to adopt for the start-up or continuation of their activities.