The public limited company (SA) is one of the most common legal forms in Switzerland, primarily due to its flexibility and the protection it offers shareholders. In this article, we will delve into the SA under Swiss law, covering aspects such as its formation, share capital, governance, shareholder liability, and key steps in dissolution. We will also discuss the advantages and disadvantages of this legal form, as well as the main tax and accounting obligations.
Formation of a SA
Choosing the legal form
Before establishing a company in Switzerland, selecting the most appropriate legal form for your project is crucial. The public limited company (SA) is particularly suited for businesses with growth potential and those looking to attract investors, thanks to its flexibility regarding capital and share transfers.
Drafting the articles of association
The articles of association are the founding document of the SA. They must be written and contain mandatory information such as the company name, registered office, purpose, share capital amount, number of shares, and their nominal value. Optional provisions, such as governance rules or specific shareholder rights, can also be included.
Minimum share capital and contributions in kind
The minimum share capital for a SA in Switzerland is CHF 100,000, of which at least CHF 50,000 must be paid up at the time of incorporation. Contributions in kind are also possible, subject to an independent valuation and specific mention in the articles of association.
Registration formalities
Once the articles of association are drafted and signed, the company must be registered with the Commercial Register. This process includes publishing a notice in the Swiss Official Gazette of Commerce (SOGC) and providing various documents, such as the articles of association, proof of domicile for directors, and an audit report in the case of contributions in kind.
Share capital and shares
Types of shares
A SA can issue different types of shares, such as registered shares (attributed to a specific shareholder) or bearer shares (transferable without formalities). Shares can also have varying voting or dividend rights, depending on their category.
Nominal value and capital payment
Each share must have a nominal value, determined during the company’s incorporation and indicated in the articles of association. The share capital must be fully or partially paid up, according to legal requirements and statutory provisions.
Capital increase and reduction
The share capital of a SA can be increased or reduced by a decision of the general meeting of shareholders, subject to certain conditions and procedures. A capital increase can be achieved through the creation of new shares, cash or in-kind contributions, or the conversion of reserves. A capital reduction can be done by decreasing the nominal value of shares, buying back shares, or reducing the number of shares.
Shareholder rights and obligations
Shareholders of a SA have the right to attend general meetings, vote on important decisions, receive dividends, and inspect company documents. They are also required to pay up their capital contributions in accordance with the articles of association and legal provisions.
Governance of a SA
General meeting of shareholders
The general meeting of shareholders is the supreme body of the SA. It meets at least once a year and is primarily responsible for approving the annual accounts, appointing directors and auditors, and amending the articles of association. Shareholders can also convene extraordinary meetings to address urgent or important matters.
Board of directors
The board of directors is the executive body of the SA, responsible for managing and representing the company. It comprises at least one director, who can be an individual or a legal entity. Directors have legal obligations, such as loyalty, diligence, and fidelity to the company, and can be held liable for mismanagement.
Auditor
The auditor is responsible for auditing the annual accounts of the SA and verifying their compliance with accounting and legal standards. Appointing an auditor is mandatory for SAs subject to an ordinary audit (depending on size and turnover) and optional for those subject to a limited audit.
Day-to-day management and delegation of powers
The board of directors can delegate the day-to-day management of the company to board members or third parties, subject to certain conditions and limitations. The delegation of powers must be stipulated in the articles of association or an internal organizational regulation.
Liability of shareholders and directors
Limitation of shareholder liability
Shareholders of a SA have their liability limited to their capital contributions. In the event of bankruptcy, they are not required to cover the company’s debts beyond their investment.
Director liability
Directors of a SA can be held liable to the company, shareholders, and creditors for mismanagement, breaches of the articles of association, or legal violations. This liability can be joint and several, meaning each director can be held responsible for covering the total damages caused.
Sanctions for mismanagement
Directors may face fines, imprisonment, or professional disqualification for serious misconduct or fraudulent bankruptcy.
Protection of minority shareholders
Swiss law offers protections to minority shareholders, such as the right to convene a general meeting, request a special audit in case of suspected mismanagement, or oppose decisions that harm their interests.
Taxation and accounting
Corporate income tax and capital tax
SAs are subject to corporate income tax and capital tax at both federal and cantonal levels. Tax rates vary by canton and can be influenced by various factors, such as reserves, undistributed profits, and share capital value. Tax relief may be available for specific activities, such as research and development or investments in designated economic zones.
VAT and other taxes
SAs are also subject to value-added tax (VAT) if their turnover exceeds a certain threshold (CHF 100,000). VAT is levied on goods and services supplied in Switzerland and must be declared and paid periodically to the tax authorities. Other taxes, such as stamp duties or property taxes, may apply depending on the company’s activities.
Accounting and audit obligations
SAs must maintain accounting records in compliance with Swiss or international standards (Swiss GAAP FER, IFRS) and present annual accounts, including a balance sheet, income statement, and explanatory notes. An audit of the accounts is mandatory for SAs subject to an ordinary audit and optional for those subject to a limited audit.
Dissolution and liquidation of a SA
Reasons for dissolution
The dissolution of a SA can occur for various reasons, such as a decision by the general meeting, bankruptcy, merger with another company, or fulfillment of the statutory purpose.
Liquidation procedure
The liquidation of a SA involves realizing its assets, paying its debts, and distributing the liquidation proceeds (if available) to shareholders. The liquidation process is overseen by a liquidator, who can be a director, third party, or public authority, depending on the circumstances.
Distribution of liquidation proceeds
The liquidation proceeds are the difference between the realized assets and paid debts during the liquidation of a SA. They are distributed to shareholders proportionately to their share capital contributions, unless otherwise stipulated in the articles of association or by law.
In summary, the SA is an attractive legal form for entrepreneurs in Switzerland due to the protection it offers shareholders and its flexibility in management and financing. However, it also involves significant legal and administrative obligations, particularly regarding governance and accounting. Therefore, it is essential to understand the legal and tax implications thoroughly and seek professional advice before creating a SA.
