According to the Switzerland Global Enterprise Handbook for Investors the following basic options are available for establishing a business in Switzerland: – Forming an unincorporated or incorporated company – Setting up a branch office – Acquiring an existing company in Switzerland (either unincorporated or incorporated) – Formation of a joint venture (unincorporated or incorporated company) – Forming a strategic alliance with or without an equity interest The most common choices for a foreign company located in Switzerland are subsidiaries (in the form of a stock corporation or limited liability company, i. e. an AG or GmbH) and branch offices. The newly created limited partnership for collective investment is also an attractive option for risk capital.

Under Swiss Law, a business entity can be established using any one of the following forms: AG/SA (the equivalent of a US incorporated company or UK public limited company); GmbH/Sàrl (equivalent of a US limited liability company or UK limited company); partnership; non-profit association; and foundation.

For businesses, the main distinction lies between unincorporated partnerships and incorporated companies [sourced from Guide to Starting a Business in Geneva]:

Sole proprietorship and unincorporated partnerships:

These business structures are cheap to setup, but the owner bears unlimited personal liability for the business on all his or her assets. In the case of unincorporated partnerships (“société en nom collectif” or SNC) and sole-proprietorship (“Raison individuelle”, “Société simple”), partners are personally liable for the company’s debts (including on their private assets). The main unincorporated legal structures in Switzerland are: Sole proprietorship Simple partnership General partnership Limited partnership

Incorporated companies:

This type of company is more costly to set up, but the owner’s liability is limited to the amount of his or her share capital (except in the case of criminal liability). Incorporated companies (Sàrl or SA) limit this exposure to the invested capital only. The main incorporated legal structures in Switzerland are: -Limited liability company (GbH/Sàrl) -Corporation limited by shares or limited company (AG/SA) -Branch office

All types of business entities defined by Swiss Law are available to domestic and foreign investors alike. [1]

Businesses can take the legal forms listed below. A checklist for founding companies can be found on the KMU Portal.

1. Single-owner company or sole proprietorship (Einzelunternehmen/L’entreprise individuelle)

Suitable for sole owners of a business or other professionals who work for themselves, such as freelancers, small businesses and individual entrepreneurs. They tend to refer to businesses run by one individual, who must be a Swiss resident. Registration with the Chamber of Commerce is mandatory if annual sales exceed CHF 100,000. Detailed information can be found on the KMU Portal. The registry checklist and procedures can be found on the KMU Portal.

2. General partnership (Kollektivgesellschaft/Société en nom collectif/)

A general partnership is an association of people operating a commercial business; it is similar to sole proprietorship but with more than one person involved. This category is used when two or more people jointly operate a company. No limited capital is required, all partners must be Swiss residents and the company must have a Swiss address. All partners have unlimited liability and registration with the Chamber of Commerce and Commercial Registry is mandatory. A detailed overview of general partnerships can be found on the KMU Portal. The registry checklist can be found on the KMU Portal.

3. Limited partnership (Kommanditgesellschaft/Société en commandite)

This a version of general partnership in which general partners have unlimited liability, while limited partners may be liable up to an agreed amount. Registration with the Chamber of Commerce is mandatory. The registry checklist can be found on the KMU Portal. A detailed overview of limited partnerships can be found on the KMU Portal.

4. Corporation/Joint-stock company (Aktiengesellschaft/Société Anonyme) (AG/SA)

This is the most common form taken by businesses, where the corporation is considered an independent legal entity. A member of the board or a director must be a resident of Switzerland, with sole signatory rights. This prerequisite can also be met if two members of the board or two directors have joint signatory rights and are residents of Switzerland. Liability is limited to the value of the company’s assets and the minimum amount of shareholders’ equity is CHF 100,000, of which CHF 50,000 must be fully paid for. The company must comply with formal incorporation procedures. Processing the registration generally takes between two and four weeks, after which the company is a legally recognised entity. More information on AG/SA can be found on the KMU Portal, and registry checklist and procedures can be found here.

5. Limited liability company (Gesellschaft mit beschränkter Haftung/Société à responsabilité limitée) (GmbH/Sàrl)

This type of company requires a minimum shareholders’ equity of CHF 20,000, of which CHF 10,000 must be fully paid for. It counts as a legal entity. At least one managing director who is authorised to sign on behalf of the company must be resident in Switzerland. In general, all members participate jointly in the management and representation of the GmbH/Sàrl, however, the management of the company may be conferred to non-members. This type of company is cheaper to start than a limited company, but – contrary to the AG/SA – the shareholders are publicly listed in the commercial register. Detailed information on GmbH can be found on the KMU Portal, and registry checklist and procedures can be found on the KMU Portal.

Limited liability companies (GmbH/Sàrl) and Corporation/Joint-stock companies (AG/SA), if pursuing non-profit activities, may assume legal forms for non-profit organisations.

The formation of a company takes two to four weeks from the submission of required documents to the date when the company is considered legally established (when it has legal effect with respect to third parties). The time required can be less in simple cases and depending on the canton. The State Secretariat for Economic Affairs (SECO) provides an online desk for founding companies called “EasyGov”.

As a rule, any trading, manufacturing or other form of commercial enterprise is required to be registered in the commercial register. Detailed information on the commercial register and the rights and obligations of companies with respect to the commercial register can be found on the KMU Portal. Registration guarantees that the company name is protected. It is only after registration in the commercial register that legal entities receive their own legal personality and status. Application for registration in the commercial register can be done electronically via EasyGov, provided that the applicable requirements are met [2]. Every business and company in Switzerland receives a company identification number (UID), which is required for administrative work such as registering for the VAT. Information on UID can be found on the KMU Portal.

Additionally, a comprehensive step by step procedure and requirements for registration of corporation/joint-stock companies, limited liability companies, and sole proprietorships can be found on Gruenden.ch. The website is available in German only, and is linked to offices for the canton of Zurich. Procedures, however, follow a federal law, and hence apply to all cantons of Switzerland.

Legal forms for non-profit organisations:

As mentioned above, Limited liability companies (GmbH/Sàrl) and Corporation/Joint-stock companies (AG/SA), if pursuing non-profit activities, may assume legal forms for non-profit organisations. The main legal forms for non-profit organisations are[3]:

1. Association (Verein/association):

An association does not require approval from public authorities in order to operate in Switzerland. Associations acquire legal personality as soon as their intention to exist as a corporate body is apparent from their articles of association. No registration is required under Swiss law[4]. Entry in the commercial register is necessary if the association operates a commercial business to achieve its purpose and generates more than CHF 100,000 in annual turnover. Detailed information can be found on the KMU Portal.

2. Foundation (Stiftung/fondation):

A foundation is a legal entity that does not have members, but may have beneficiaries and which is mostly used for charitable purposes. A foundation is established by a notarial deed or by a will. From 1 January 2016 (as of July 2015) all private foundations must be entered in the commercial register in order to gain their legal personality. Family and religious foundations are exempt from this requirement and are not subject to administrative supervision. More information can be found on the website (available in German, French and Italian) for Federal Supervisory Board for foundations, on Step.org, and on the KMU portal.

For cryptocurrency related companies in particular, most developers aim for a foundation such as Ethereum Foundation.

The advantage of a foundation in an early phase (complete independence of any ownership since there are no shareholders), contrasts with the disadvantages in the long term such as governmental supervision, “locked box” (no chance to ever get the funds out again other than for promotion of the foundation’s purpose), rigid structure or no tax benefit per se (only in case of a charitable foundation, a status seldom granted). In addition, although there is no formal ownership, whoever controls the board of the foundation controls the foundation itself. There is no transparency regarding the founders in public registers. The suitable corporate form needs to be evaluated in each case. A limited liability company, for example, would provide full transparency on the ownership due to the required registration of the shareholders in the public commercial register. Irrespective of the corporate form chosen, a recharacterisation by the courts cannot be excluded if the activities of the start-up correspond to the activities regulated by financial markets laws [5].

SOURCES

[1] Why Geneva

[2] Switzerland Global Enterprise Handbook for Investors

[3] Thomson Reuters Practical Law

[4] Geneva Welcome Center

[5] Wenger & Vieli