A limited liability company (SARL) in Switzerland: responsibility, share capital, establishment

A limited liability company (SARL) (Art. 772827 CO) is a combination of a public limited company and a partnership. It is one of the most common legal forms in Switzerland.

A SARL is a commercial company with its own legal personality and a low start-up capital, which is particularly suited to SMEs and family-owned firms. It is a mixture of a public limited company and a partnership. There are over 92,000 SARL entities in Switzerland, which makes it the third most popular legal form after the sole proprietorship and the public limited company. 

General information

A SARL is established at the time of its entry in the Commercial Register. As in the case of a public limited company, the authentication of its establishment must be notarized. The founders of the firm must declare its establishment by means of an official deed, draw up its articles of association, convene the shareholders’ meeting and appoint an auditor.

Each shareholder holds at least one share in the share capital. A written agreement drawn up between the parties concerned is sufficient in order to transfer shares. An official deed is no longer required.

A minimum share capital of CHF 20,000 (Art. 773 CO) must be contributed in the form of either cash contributions or contributions in kind. The joint and several liability of the shareholders ceases to apply once the share capital is fully paid up. Contrary to the provisions of the previous law governing SARLs, there is no longer an upper limit for the share capital. The minimum contribution per shareholder, in cash or in kind, amounts to CHF 100 (Art. 774 CO); there are no longer any restrictions governing the number of shares per shareholder. The owners of the shares must be entered in the Commercial Register by name. 

Liability rules

The term “limited liability” may cause some confusion, as the company is fully liable for its debts. Given that the share capital must be fully paid up, the personal liability of each shareholder is not invoked unless an obligation to make an additional payment or provide an ancillary service has been written into the articles of association.

This obligation is intended only to cover balance sheet losses, to allow for the continuation of the firm's business or for cases defined in the articles of association. The total amount of additional payments must not exceed twice the nominal value of the share owned by a particular shareholder (Art. 795 CO).

Preconditions for establishment of the company

One or more natural persons and/or legal entities are required for the establishment of a SARL. As in the case of a public limited company, a SARL may be founded and operated by a single individual. 

The choice of corporate name is unrestricted but the addition of “SARL” is compulsory (in full or in its abbreviated form). In addition, the business name must differ significantly from any other business name already registered in Switzerland.

As in the case of a public limited company, a SARL must call upon the services of a state-approved auditor. The auditor checks the accuracy of the accounts each year and draws up a report for the shareholders’ meeting. SARLs are obliged to keep proper accounts and present the latter in accordance with the rules set forth in the Swiss Code of Obligations (Art. 957 et seq. CO).  

Start-up costs and taxes 

The start-up costs for a SARL are slightly lower than those for a public limited company, but they are higher than those of a partnership. 

The establishment of a SARL requires an equity contribution of at least CHF 20,000. In addition to this basic capital, consultancy fees concerning start-up methods amounting to between CHF 600 and CHF 2,000, notarial fees relating to memoranda of association of between CHF 700 and CHF 2,000 as well as fees for registration in the Commercial Register of CHF 600 (provided that the share capital does not exceed CHF 200,000) also apply. Moreover, the founder must pay a tax referred to as “stamp duty” amounting to 1% of the share capital if the latter exceeds CHF 1,000,000. 

Further information can be obtained from:

A SARL is subject to double taxation. It is taxed on its net profit and the shareholders must declare the distributed profit as income. The share capital is subject to wealth tax for both the SARL and the shareholders. 

Start-up capital

The share capital of the SARL (start-up capital) must amount to at least CHF 20,000 (Art. 773 CO). It must be paid up to a level of at least 100% or covered by contributions in kind at the time of the establishment of the company. The capital does not necessarily have to be paid in cash. It may be paid in the form of contributions in kind (e.g. immovable assets, machinery, etc.).

At the time of establishment of a limited liability company, the founder or founders must open a consignment account with a bank. This is the bank account used to deposit the capital of the company being established pending its registration in the Commercial Register. A consignment declaration is issued in exchange for the payment of funds, which remain blocked in the consignment account until the publication of the company's establishment in the Commercial Register. In order to open a consignment account with a bank, it is necessary to enclose a certified copy of an identity document of the person signing the application or an authentication of the applicant's signature.

After the publication of the company's establishment in the Swiss Official Gazette of Commerce, the funds are paid into the firm's current account and the consignment account is closed. The transfer is completed at the latest on the first working day following the publication in the Swiss Official Gazette of Commerce. The funds are released by the bank upon presentation of a certified true extract from the Commercial Register confirming the registration of the company.

Several shareholders may participate in the share capital at will. They must be registered by name as shareholders in the Commercial Register. The nominal value of the shares in a SARL must amount to at least CHF 100 (Art. 774 CO).

If a holding in the start-up capital amounts to or exceeds 25%, the acquirers or holders must inform the company who is the beneficial owner of the holding. The SARL must keep an updated register of the beneficial owners.

The shareholders’ meeting in a SARL may decide to increase the share capital. The incorporation of new shareholders is required in this context. It will then be necessary to amend the articles of association and the Commercial Register entry accordingly (Art. 781 CO). 

Third-party financing in the form of credits and loans is possible in principle for companies with share capital provided that the necessary guarantees are supplied. The reputation of the company determines the interest rate to be paid by the creditor. 

In addition to the above-mentioned possibilities concerning the right of companies to call upon external investors, it is also possible to adopt financing solutions that combine external funds with stockholders’ equity. These mezzanine funds are allocated in the form of convertible loans or warrant bonds with an interest rate that depends on the success of the firm (related-party loans).  

Constitution of reserves 

5% of the annual profit of a SARL is allocated to the general reserve until the latter reaches 20% of the paid up share capital. In the case of a deficit during the fiscal year, the 5% allocation to the general reserve is canceled. The SARL is also authorized to constitute special reserves. (Art. 671 and 672 CO). 

5% of the share capital is set aside for the payment of dividends. Extraordinary distributions that exceed this 5% and the variable amount are referred to as super-dividends. Therefore, 10% of the super-dividends are allocated to the general reserve. 

The profit share received by members of the management body (directors’ fees) is variable and distributed only after the basic dividends have been paid. In this case,10% of the directors’ fees are allocated to the general reserve.  

Accounting system 

SARLs that exceed two of the thresholds below during two consecutive fiscal years are subject to an ordinary audit (Art. 727 CO):

  • Balance sheet total: CHF 20 million
  • Turnover: CHF 40 million
  • Number of employees: 250

Moreover, public companies and companies that are obliged to prepare consolidated accounts must carry out an ordinary audit in all cases.

Others are subject to a limited audit. They may dispense with the latter if they employ fewer than 10 people as an annual average. 

The shareholders’ meeting

The shareholders’ meeting constitutes the main body of the SARL and sets forth specifications for the articles of association, the management and the auditor. It approves the profit and loss account and the balance sheet, decides how to use profits and discharges managers. SARLs are also subject to the accounting provisions that apply to public limited companies. The management board of a SARL corresponds to the board of directors of a public limited company. All the shareholders have the right and obligation in principle to assume the joint representation and management of the firm. They also have the right to entrust the management of the firm to third parties (non-shareholders).

Since July 1, 2015, all SARLs have had the right to be represented by any individual whose place of residence is in Switzerland. This individual must have access to the register of shareholders and beneficial owners. As in the case of the board of directors of a public limited company, the personal liability of the managers of a SARL is invoked in the event of damage caused by a violation of duty, either deliberately or out of negligence.

Withdrawal, transmission 

The assignment of shares in a SARL must be confirmed in writing (Art. 785 CO). The approval of the shareholders’ meeting must be obtained in this context. Unless the articles of association specify otherwise, approval is granted on the basis of a quorum of at least two-thirds of the votes represented and the absolute majority of the share capital for which the voting right may be exercised (Art. 786 and 808b I. no. 4 CO).

From a material point of view, the partial or total transmission of business is accomplished by means of the transfer of assets and liabilities. The assignment of the assets or business of a SARL is governed by the provisions of the law on mergers (Art. 181 IV CO). Art. 333 CO is applicable for the transfer of employment relationships.

The chosen business name may be retained for an indefinite period. In the case of partnerships, a change in shareholder will not affect the business name and the choice of another legal form will ideally affect only the indication of said legal form (Art. 954 CO).

For a detailed overview of limited liability companies and their operation, see:


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Last modification 25.09.2018

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