Key points for the formation of a limited liability company

According to the Code of Obligations, a limited liability company (LLC or GmbH) is established by the shareholder(s) declaring in a public deed that they are establishing a company with limited liability, defining the articles of association and appointing the governing bodies.

Before the notarial act of formation can be concluded by the partners, various key points must be determined in advance together with the consultation of the notary public:

1. Number of shareholders

A limited liability company can be formed by one or more natural persons or legal entities. The provision according to which at least two shareholders are required for incorporation was eliminated several years ago.

2. Company name

The name of a limited liability company can be chosen freely. The content of the company name, however, must be truthful, not deceptive and not contrary to public interests. In addition, the legal form of the company (limited liability company) must be evident from the company name.

3. Registered office of the company

The shareholders must determine in which municipality the company shall have its registered office. It is required that the company has its own office premises in the municipality it chooses or that another person provides it with a domicile (c/o address).

4. Statutes

The articles of association regulate the organization of the company. Most importantly, the founders must specify the company, the registered office, the purpose and the amount and denomination of the share capital. The purpose can not be formulated in a general, illegal or immoral a manner, it must precisely describe the company's field of activity.

5. Payment of the capital stock

The capital stock of a limited liability company must amount to at least CHF 20,000. This amount must already be deposited with a Swiss bank at the time of formation (cash formation) or it must be secured by other assets of value (formation in kind).

6 Management and representation

Unless the founders decide otherwise, all partners exercise the management jointly and each managing director is authorized to represent the company. It is often the case that not all shareholders wish to participate in the management however. In this case, the person responsible for the management, who is authorized to sign on behalf of the company must be determined. If the management is to be exercised by several persons, a chairman of the management must be determined.

7. Election or waiving the election of an auditor

A LLC does not necessarily require an external body to audit the annual financial statements of the LLC. The election of an auditing body can be waived if the company is not subject to ordinary auditing (SMEs are generally not subject to ordinary auditing) and has no more than ten full-time employees on an annual average.

As soon as the regulations above have been determined by the founders, the notary public will prepare the formation documents and send them to the founders for audit. Provided all partners agree with the founding documents, a notarization date is agreed upon, at which the company is established. Subsequently, the notary submits the founding documents to the Commercial Register Office for entry into the Commercial Register.

The company is established by the deed of incorporation. However, the company acquires its legal capacity only when it is registered in the Commercial Register.

8. Further advice

If you have any questions regarding your individual case or need further advice, please do not hesitate to contact us.