Knowledge

Changing Your Business Structure in Switzerland

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Though not a common process, changing the legal entity structure of a business in Switzerland is possible. Entrepreneurs who have opened a company in Switzerland are allowed to change the legal structure of the company they formed in Switzerland if needed.

Most of the businesses remain under the same structure they’ve established at the incorporation, therefore it is recommended to change the business structure when the current legal entity does not provide sufficient advantages or if that particular entity is no longer representing the interests of the company due to a change of activity domain.

One of the most common changes of business structures is that made from sole proprietorship to a Limited Liability Company. Another business structure change that is often requested is the one from sole proprietorship to Public Limited Company (AG).

Sole proprietorship is established by a private individual engaging in commercial activity. No minimum capital is required at the registration of it. The name of the firm consists at least of the owner’s surname. The owner has unlimited liability, including private assets.

A limited liability company is a type of legal structure that has its own legal identity. It can be formed by at least two individuals with nominal capital. In case of bankruptcy, owners of a limited liability company only risk the capital that they have invested and not any of their personal assets. If on a sole proprietorship the owner can be just one, in the case of a limited liability company, additional people may also have stakes in the respective company.

Another difference from the sole proprietorship is that the founding partners have complete freedom regarding the company name. The initial capital required to open a limited liability company in Switzerland is a minimum of 20,000 CHF.

The public limited company (AG) is a popular business model and is also the most commonly used legal structure for financial companies, thus the change from sole proprietorship to AG. This type of business structure is also suitable for small-to-medium-sized companies.

The owner or owners of a public limited company are not liable for the actions of the said company, just as in the case of limited liability companies. This is due to the fact that the AG has its own legal identity. The liabilities of a public limited company must be completely covered by the assets it owns.

This is why this kind of changes will expand the business, increase the availability of more funding options, increase risk management liabilities, provide legal protection to assets held by the company, enable corporate tax incentives, attract more investors and increase the ability to recruit quality staff.

Sole proprietorships owners can switch their businesses to LLCs it the legal entity has at least three clients at any given time. 

In order for the change to happen, some steps are required to be followed:

1. The closure of the current legal entity will be needed. The company will have to be unregistered from the Commercial Registry.

2. Registration under the new legal entity with all the documentation required by the institution, same as in the case of company formation process.

3. After the share capital has been deposited in the newly created capital account and the documents have been prepared, executed and submitted to the Commercial Register, the registration of the company shall take 5 to 10 days.

Though the process is quite straight forward, the assistance of a company specialized in this kind of activities might turn out to be a fastest and easiest way for the business change to happen. 

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