Advantages and disadvantages of a limited company (SA)

With an SA, shareholders assume less financial liability. But establishing an SA requires more initial capital. 

Advantages

  • Liability: shareholders are only responsible for their portion of capital stock. Warning: in the event of criminal or negligent acts, the management (board of directors and corporate officers) can be held liable for their own personal assets.
  • Publication: the allocation of assets is not official (no registration of shareholders with the trade register). This makes selling the company easier.
  • Company benefits: the employee shareholders are considered employees and must be insured through the company. 
  • The company name can be chosen freely.
  • Taxes: progressive taxation may be interrupted by splitting up profits.
  • The founder can wield great influence over the company as he or she may get shares with preferential voting rights, restriction of transfer of shares, and can allocate shares on his or her terms. 

Disadvantages

  • Higher minimum capital (CHF 100,000) required than that of a SARL.
  • Extensive formalities and high fees to set up the company.
  • Double taxation on the SARL’s yield and on its capital as well as on the shareholders’ income (dividends) and assets.
  • Strict accounting instructions: legal reserves, measures to be taken in the event of excessive debt, etc.
  • High management fees for agreements, management reports, bookkeeping, general meetings, tax forms, auditors, etc.

Last modification 02.08.2018

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