According to the Swiss Code of Obligations (OR), there are eight company forms in addition to the sole proprietorship. The best known are the stock corporation (AG) and the limited liability company (GmbH). But do you know what other company forms there are? Particularly in the process of setting up a company, it is important to look at the options in order to find a solution that best meets your needs. We are happy to explain in this article which legal forms there are, and what the differences are.
What forms of company are there?
In addition to the sole proprietorship, there are a total of eight company forms. We will be happy to explain the individual company forms in more detail below and show you what the differences are between the eight companies.
What is a sole proprietorship?
In a sole proprietorship, the founder bears all risks and entrepreneurial responsibility alone and is liable with his or her private assets for any claims. This legal form is particularly suitable for activities in which the owner has a strong connection, such as for architects or doctors. Therefore, the company name must also include at least the family name of the founder(s).
What is a company?
A company is defined in the law as a contractual association of two or more persons to achieve a common purpose with common forces and means. However, today, in the course of harmonization with European law, it is also possible for certain companies to be formed on their own.
How do the companies differ?
On the one hand, there are partnerships and corporations. These differ primarily in terms of the risk assumed. In partnerships, the partners contribute their capital and labor for the common purpose. In corporations, the performance of the partners is the capital contribution to the company, it does not depend on the active participation. In addition, there are also companies which pursue a specific purpose, but which are neither partnerships nor corporations.
Another distinction between companies is whether they are legal communities or corporations. In the case of a legal community, several natural persons join together and are jointly liable for the risk of the company. In this case, the shareholders are in the foreground. Although they act jointly, the company is not a legal entity. Corporations, on the other hand, have their own legal personality and are thus capable of acting as a legal entity. These companies can, for example, conclude contracts and need bodies for their actions, which are determined by the OR and the articles of association.
1. Simple partnership
The simple partnership has no specific purpose in itself and can be used if no other legal form fits. For example, for an office partnership. The simple partnership is created by a contract and is a legal community. However, it is rather unsuitable as a permanent enterprise, since it cannot be registered as a commercial enterprise in the Commercial Register.
2. General partnership
The general partnership is also a legal community. Since it pursues the economic purpose of generating profit, it is also referred to as a commercial company. In this case, two or more natural persons join together to jointly operate a company run according to commercial rules. Entry in the commercial register is mandatory. A general partnership is not taxable, the individual partners are taxed directly and have unlimited liability with their own assets.
3. Limited partnership
The purpose of a limited partnership is also to make a profit and it is therefore a commercial company. In addition, it is also not a legal entity and must be entered in the Commercial Register. With this form of company, it is possible to obtain additional equity without involving a new partner. Therefore, it is often established for sole proprietorships and general partnerships. One of the partners has unlimited liability as general partner with his private assets, the other partners are limited partners and are liable only up to a certain contribution.
Corporations and mixed companies
1. Stock corporation (AG)
The joint-stock company is one of the most common forms of company in Switzerland. It is founded by one or more natural persons or legal entities. They contribute a certain amount of capital (at least CHF 100,000), which is divided into partial sums, so-called shares. The AG is a corporation and therefore a legal entity. The entry in the commercial register is mandatory. In contrast to the above-mentioned partnerships, only the company assets are liable for the debts of the AG. Since the joint stock company also pursues the economic purpose of profit maximization, it belongs to the commercial companies.
2. Limited partnership
The limited partnership is a hybrid between a corporation and a partnership. Structurally, the emphasis is on the capital-related elements. However, unlike the ordinary joint stock company, there are two types of shareholders. On the one hand, there are the ordinary shareholders, who are only liable with the share capital and have limited participation rights, and the unlimited shareholders, who also hold the management and representation. As with the joint-stock company, the aim is to maximize the profit made, which is why limited partnerships also belong to the category of commercial companies.
3. Limited liability company (GmbH)
The limited liability company (GmbH) is also a hybrid form, mixing stock corporation and general partnership. Along with the AG, it is one of the most common legal forms throughout Switzerland. It is a trading company with its own legal personality. Since the starting capital is relatively low compared to the stock corporation at CHF 20,000, this legal form is particularly suitable for SMEs and family businesses. Each partner has at least one share in the company capital and is liable only with this share capital, but not with his private assets.
The cooperative pursues the economic purpose of joint self-help, e.g. in housing construction. It is a legal entity. Although no initial capital is required for its establishment, at least seven participating natural and legal persons must join together for this purpose. The cooperative members are jointly liable for the company's assets. The cooperative must also be registered in the Commercial Register.
The association is a separate legal entity, but pursues an idealistic purpose and is not profit-oriented. In order to do business, the association must be registered in the Commercial Register. There is also no prescribed founding capital for this legal form. At least two natural or legal persons are sufficient for the foundation.
Are you also on the way to founding a company, but still unsure which legal form to choose? We will be happy to provide you with reliable and competent advice and help you find the right model for your needs.