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CORPORATION (JOINT-STOCK COMPANY)

The joint-stock company or corporation (SA in French, AG in German) is the most widely used type of legal entity in Switzerland. Foreign companies often choose this legal form for their Swiss subsidiaries. A corporation is a distinct legal entity, and its liability is limited to its assets. The authorized capital is determined in advance and is subdivided into shares. The society must obligatorily subjected to the yearly independent audit and financial accounting which is in accordance with legislation.

It requires a signed capital of 100.000,- CHF, half of which must be paid up during the registration. The shareholders of a corporation can remain completely anonymous. There are no limitations on foreign shareholders, however Swiss laws do require a local director. We can of course provide a Swiss director.

Advantages of the SA as a legal form are:

• Limitation of liability to the company‘s assets
• Anonymity of the capital providers
• Simple inheritance arrangements
• Publication of annual financial statements required only if the SA has outstanding bonds or if it is listed on the stock exchange.
• Good for holding companies.

Disadvantage of the SA as a legal form is:

• Large amount of paid up capital required.

Establishing a corporation or joint-stock company :

• At least three shareholders are required. One must be a Swiss national and resident in Switzerland. It is possible for shares to be held in trust by third parties. Altough the legal requirements for the establishment of a corporation prescribe three perons, the founders may withdray immediately following the founding act. This makes it possible to manage a corporation as a signle-member-company. The single shareholder corporation is not uncommon.
• The minimum capital is CHF 100,000 of which at least CHF 50,000 must be paid in
• The legally prescribed articles of incorporation and governing bodies are to be created.
• There is a formal incorporation procedure ending with entry in the commercial register. The entry is published in the Swiss Commercial Gazette.

The law prescribes three governing bodies:

• The General Meeting of Shareholders is the highest governing body. It has the most important powers, such as the definition and modification of the articles of incorporation, electing the board of directors, choosing the statutory auditors, approving the annual report, balance sheet and income statement, deciding on the distribution of profits and approving or ratifying the actions of the board of directors.
• The board of directors is the managing body of the corporation (SA). It consists of one or more members who must also be shareholders. The majority of board members must be resident in Switzerland and either be Swiss citizens or citizens of an EU or EFTA member state. Exceptions are possible in the case of holding companies. But in every case, at least one authorized representative of the company must be resident in Switzerland.
• The statutory auditors examine the accuracy of the annual financial statements and report to the board of directors or to the shareholders at the annual general meeting. They must be certified and independent.