The right legal form for every company! The most common small and medium-sized enterprises (SMEs) in Switzerland are the sole proprietorship, the public limited company (AG) and the limited liability company (GmbH). Other lesser-known legal forms, such as the general partnership (SNC), limited partnership, simple partnership (SS), cooperative or association, may also be of interest. It all depends on your business needs.
Choosing the legal form of your business entity is of prime importance, as it will have a number of consequences, relating to the liability of the company or its members, the minimum capital to be invested, the formalities involved in setting it up, and its organization in general. The tax treatment of your business also plays a part in the choice of your entity’s structure.
By way of example, the minimum capital required to set up a limited liability company is CHF 20,000, and CHF 100,000 to set up a public limited company, while a sole proprietorship or general partnership can be set up with no minimum capital requirement.
The formalities involved in setting up a company also vary according to the choice of legal form: a sole proprietorship need only be entered in the Commercial Register if its annual sales exceed CHF 100,000, whereas a public limited company must be incorporated by deed, before a notary, in order to be entered in the Commercial Register and to be incorporated.
Our specialized lawyers will advise you personally on the best choice for setting up your own business.
The liability of the members of a business entity depends directly on the legal form chosen.
In fact, risk-taking is the key distinction between limited liability companies (Sàrl, SA) and partnerships.
If you are unwilling or unable to bear the risks and liabilities of your business with your own assets, you should consider operating your business through a limited liability company.
The owner of a sole proprietorship is personally and unlimitedly liable for the acts – and non-acts – of his or her business entity. In other words, their personal debts and the debts of their company merge into one. The same applies to the members of a general partnership, who are nonetheless jointly and severally liable for the partnership’s debts.
In contrast, members of a limited liability company have two separate assets: their personal assets and the assets of their company. Their liability is thus limited to the company’s assets, provided that the shares have been paid up. In practical terms, creditors will not be able to take direct action against the members of a bankrupt company, subject to certain exceptions.
The greater the risk of the business or financial contribution, the more advisable it is to opt for the legal form of a limited company.
The Articles of Association include numerous details relating to the legal entity, first and foremost the entity’s name, purpose and registered office. They also contain rules on the organization of the entity, such as the designation of bodies and the voting rights of members at the general meeting. Reading the Articles of Association will help you understand the powers of representation of the company’s bodies and the decision-making weight of each of them.
The Articles of Association will be published in the Commercial Register, in such a way that the information they contain is accessible – and enforceable – against any interested party.
In the specific case of a public limited company, the Articles of Association will also contain essential information on the amount of share capital and paid-up capital, details of the shares (their number and par value) and the appointment of members of the Board of Directors and auditors. The law imposes minimum requirements on the content of Articles of Association for limited companies, as well as on their form: they must be authenticated.
In addition to the basic requirements, it is advisable to include further details in your Articles of Association, such as contributions in kind, details of the General Meeting and how to convene the Board of Directors.
In conclusion, a commercial lawyer’s familiarity with the Articles of Association of a legal entity will enable him or her to gather information on the functioning of the entity, which will enable you to draw up your strategy according to the project in progress, the issue or even the dispute.
The corporate purpose of a business entity is an important element when founding a company, as it specifies the reasons for the entity’s creation, its mission and objectives. This will be recorded in the Articles of Association, and will inform the public about the company’s activities.
The purpose of the entity may be economic or commercial, but may also be of a non-profit nature. It is also important that the purpose of the company is lawful: an immoral or illegal purpose will block the incorporation of the company!
The company’s purpose provides a guideline for its mission, but also limits the business activities that can be envisaged. In joint-stock companies, for example, the governing bodies have powers of representation that are precisely defined by the purpose: they can only commit the entity to acts in line with the purpose set out in the Articles of Association.
The challenge in defining the company’s purpose is to ensure that it is sufficiently open for the entity to develop, yet sufficiently precise for stakeholders to understand the company’s mission.
Finally, it should be pointed out that certain legal forms cannot, by law, be primarily profit-making. This is the case for associations and foundations, which must have an ideal purpose (political, artistic, religious, charitable activities, etc.). What’s more, if an association’s purpose is considered to be in the public interest, it may qualify for tax exemption. A lawyer specializing in commercial law will be able to advise you on whether such conditions are met.