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Booking your own Swiss internet domain already before your new business’s establishment

STARTUPS.CH strongly recommends you to book your firm name’s internet domain during the start-up process regardless of the chosen legal form.  It is possible to do so even before the actual foundation (i.e. prior to the registration in the Commercial Registry). No Commercial Registry entry is required in order to book an internet domain.

For Switzerland and the Principality of Liechtenstein it is possible to apply for registration on www.switch.ch. The website also offers more information on the subject.

Preferably you establish the foundation of your company with STARTUPS.CH. STARTUPS.CH will provide you with professional guidance before and after the foundation.

Here you will be able to apply for a counselling interview and to request free documentation.

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Changing legal form from Sole Proprietorship to a Corporation (AG or GmbH)

After a small-scale start-up and an healthy initial growth, many intrepreneurs want to adapt to the new circumstances by changing their business’s legal form. The change from a Sole Proprietorship to a AG or GmbH may be performed in different ways.  Since a new legal entity (AG or GmbH), which takes over the components of the Sole Proprietorship (no legal entity), is formed, change is not actually the right word to describe the process. Normally, the Sole Proprietorship then ceases its existance, i.e. it does not exist any more. If the Sole Proprietorship was registered in the Commercial Registry, the registration has to be cancelled. This article will briefly describe the two usual methods to make a AG or GmbH out of a Sole Proprietorship. Both are so called qualified formations, i.e. they are subject to additional requirements. This raises the formation costs.

A) The new company may resume the business with all of the Sole Proprietorship’s assets and liabilities directly during the formation process (so called assets acquisition). These introduced assets and liabilities are not used (or are used only partially) to pay the shares (payment under subscription). Often, at least one part of the introduced assets and values remains as an incorporator’s loan to the company. In order to make this kind of formation with buy-out of all assets and liabilities possible, the Sole Proprietorship must have used double entry accounting, and have filed its annual accounts. These annual accounts must have been verifyied from an accredited auditor. In the case of an acquisition of assets, the assumed values as well as the transferor’s name are published in the Commercial Registry.

The Sole Proprietorship ceases its existance if all of its components have been transferred to the new company. Of course it is also possible to only change the legal form for one of the Sole Proprietorship’s branch of activities. In this case, the Sole Proprietorship continues to exist with the rest of its assets and liabilities. This is also possible under method B).

B)It is also possible to form the new AG or GmbH by means of a contribution in kind. In this case, the assets of the Sole Proprietorship are used for the payment under subscription of the new shares. An accredited auditor has to verify if the value of the brought in assets corresponds to the declared value. When forming a company by means of a contribution in kind, the brought in assets, their value as well as the person who brings in the assets and the amount of shares this person receives in exchange are published in the Commercial Registry. This procedure is rather rarely adopted in practice.

Preferably you establish the foundation of your company with STARTUPS.CH. STARTUPS.CH will provide you with professional guidance before and after the foundation.

Here you will be able to apply for a counselling interview and to request free documentation.

Posted in company law, corporation, limited liability company law, sole proprietorship | Comments Off

Swiss corporation (AG) shareholder rights

The shareholder rights are the counterpart of the shareholder duties under swiss law (cp. the Article on shareholder duties). The different rights can be classified into the following groups:

Property rights: The most important right in this group is the right to a dividend. Just as well, the shareholders have the right to the liquidation proceeds upon dissolution of the AG. Basically, every shareholder is entitled to such payments in proportion to his holdings in the company (e.g. a shareholder holds 25% of an AG and is entitled to 25% of the paid dividend). However, the Articles of Association of a company may deviate from this principle in order to treat some shareholders preferentially in terms of property rights. These shareholders then receive a percentage of dividends and liquidation proceeds which is higher than their holdings (e.g. a shareholder receives 50% of the paid dividends even though he only holds 25% of shares).

Participation rights: The most essential participation right is the right to vote at the general meeting of shareholders (AGM). Moreover, the shareholder has the right to personal participation to the AGM (or to be represented), the right to speak at the AGM as well as the right to have an item placed on the Agenda for an AGM. Furthermore, every shareholder has to be invited in due time and has to receive an agenda. Last but not least, significant shareholders have the right to call for an EGM and to have their requests placed on the Agenda for the EGM.

Protection and information rights: Shareholders have the right to see the Annual Report as well as the Audit Report, to ask questions to the BoD at the AGM and, under certain conditions, to inspect further documents of the company. Additionally, the shareholders of a Swiss AG have various protection rights, such as the investor lawsuit against the BoD, if the BoD has acted contrary to duty, or the right to appeal against decisions taken by the General Meeting in violation of the law or the Articles of Association. In any case, the shareholders have the right to an independent auditor. Under certain conditions they even have the right to be represented in the BoD.

Right to perpetuation of percentage of shares held: If the company issues additional shares, the hitherto existing shareholders have the right to subscribe for these new shares in proportion to their shareholding quota in the company. For instance, if the shareholder holds 25% of the company’s shares, he is entitled to 25% of the newly issued shares.

Preferably you establish the foundation of your company with STARTUPS.CH. STARTUPS.CH will provide you with professional guidance before and after the foundation.

Here you will be able to apply for a counselling interview and to request free documentation.

Posted in company law, corporation | Comments Off

Setting up a corporation/company (AG) – qualifying shares for members of the Board of Directors; does the Board of Directors have to be shareholder too?

The qualifying shares were abolished with the amendment to the corporate law, which has come into effect as of the 1st of January, 2008. This means that the Board of Directors does not need to be shareholder at the same time any more.

Preferably you establish the foundation of your company with STARTUPS.CH. STARTUPS.CH will provide you with professional guidance before and after the foundation.

Here you will be able to apply for a counselling interview and to request free documentation.

Posted in company law, corporation | Comments Off

Are there any statutory provisions concerning the nationality of limited liability company’s executives?

Yes. According to Art. 813 of the Swiss Code of Obligations, at least one of the company’s executives must reside in Switzerland.

Preferably you establish the foundation of your company with STARTUPS.CH. STARTUPS.CH will provide you with professional guidance before and after the foundation.

Here you will be able to apply for a counselling interview and to request free documentation.

Posted in company law, faq, limited liability company law | Comments Off

Can a GmbH and one of its shareholders share the same mailing address?

The are no problems if the mailing address of a GmbH corresponds to one of its shareholders’ home address. Please note though that it is very important to label the letterbox with the firm name as well. Furthermore, you have to bear in mind that, if you chose to move, you have to change the company’s registered office as well. This involves costs which may vary depending on the new office.

Preferably you establish the foundation of your company with STARTUPS.CH. STARTUPS.CH will provide you with professional guidance before and after the foundation.

Here you will be able to apply for a counselling interview and to request free documentation.

Posted in limited liability company law | Comments Off

Where can I request trademark protection and which procedure do I have to follow? What do I have to pay attention to? Startup GmbH – AG – Sole proprietorship

Basically the Federal Institute of Intellectual Property is responsible for trademark protection.

The utmost care is required when considering trademark protection, especially in the choice of the classes one wants to apply for. This is why we strongly recommend to consult a specialised lawyer in trademark issues.

In matters of trademark protection, STARTUPS.CH works together with the following lawyers:

Region of Basel: Thomas Käslin, Advokatur11, Tel. 061 271 89 74

Region of Zurich: Dr. Roger Groner, Gronerlaw, Tel. 044 283 29 24

Preferably you establish the foundation of your company with STARTUPS.CH. STARTUPS.CH will provide you with professional guidance before and after the foundation.

Here you will be able to apply for a counselling interview and to request free documentation.

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How much profits and capital taxes does a Swiss company (GmbH or AG) have to pay for 2009?

Corporations (AG) and limited liability companies  (GmbH) are both taxed as corporate bodies. One has to distinguish between the Direct Federal Tax and the cantonal and communal taxes. Profits taxes are levied at all three administrative levels (federal, cantonal, communal), with some exeptions at communal level depending on the cantons, whereas taxes on capital are only levied by cantons and communities.

The Direct Federal Tax rate on corporate bodies’ profits is the same throughout Switzerland, and amounts to 8.5%.

The profits tax rate for the canton and city of Zurich for 2009 amounts to 18.3%, the capital tax rate to 0.17%. The canton and city of Zug can be taken for comparison: the profits tax rate 2009 (for profits up to CHF 100′000) amounts to only about 6%, and the capital tax rate to 0.05%. This shows how the tax rates can vary considerably between cantons.

The total tax burden for a GmbH in Zurich 2009 amounts to 26.3% on profits and to 0.17% on capital. A company in Zug, on the other hand, is subject to a profits tax rate of approximately 12.5% and a capital tax rate of 0.05%.

Here a simplified example in this respect: In 2009, the Paper AG has generated a profit of CHF 50′000 and its capital amounts to CHF 500′000. In Zug it would have to pay CHF 3′035 of profits tax and CHF 381 of capital tax. If it was based in Zurich, with the same operating results, it would have to pay a profits tax amounting to CHF 8918 and a capital tax amounting to CHF 836. In addition to this, in both cases a Direct Federal Tax of 4′250 applies.

For details on the tax calculation, most of the cantonal tax administrations have either a tax calculator or an excel file for tax calculation on their homepage. Please note that the results of these calculators are not always 100% accurate. However, the variations are normally minimal. Here some links to cantonal calculators:

• Calculator AG
• Calculator BE
• Calculator BS
• Calculator GR
• Calculator LU
• Calculator SG
• Calculator SH
• Calculator SO
• Calculator SZ
• Calculator TG
• Calculator ZG
• Calculator ZH

Preferably you establish the foundation of your company with STARTUPS.CH. STARTUPS.CH will provide you with professional guidance before and after the foundation.

Here you will be able to apply for a counselling interview and to request free documentation.

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How do I determine the name of my partnership?

Unless all partner’s names are quoted, the firm name must include at least one partner’s surname. In business relationships, this name has to be amended with an indication like “& Partners” or similar, so as to make the legal form recognisable. In addition to that, the firm name may include a partner’s given name too.

It is not allowed to mention names which do not correspond to an absolutely liable partner. On the other hand, fancy names and technical names can be added to the firm name.

Instances: R. & F. Smith Delivery Service; Snack Bar Johnsson & Partners; Hotel Bellvue Winston & Sons Partnership

Preferably you establish the foundation of your company with STARTUPS.CH. STARTUPS.CH will provide you with professional guidance before and after the foundation.

Here you will be able to apply for a counselling interview and to request free documentation.

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Which taxes are due upon foundation of an incorporated enterprise [GmbH or company(AG)]?

Basically, no taxes are due when you incorporate your company.

Stamp duty on issues: The stamp duty on new issued capital (tax rate 1%) is only due starting from CHF 1 million of equity, so generally, formations with less equity are exempted from the federal stamp duty on issues.

Profits and capital taxes: After the entry in the Commercial Registry, you will receive a temporary profits and capital tax calculation. For every business year, you have to pay a cantonal tax on earnings and capital (which depends on where your company is based) and a direct federal tax (the rate of which is the same throughout Switzerland).

The profits tax is much higher as the capital tax and its rate can vary considerably depending on the canton (and in each canton depending on the commune)! Therefore, the domicile has to be chosen very carefully, and the tax burden has to be considered accordingy.

Preferably you establish the foundation of your company with STARTUPS.CH. STARTUPS.CH will provide you with professional guidance before and after the foundation.

Here you will be able to apply for a counselling interview and to request free documentation.

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