21.12.2025 • 18 min read
Share Capital in Switzerland: Minimum, Rules & Changes
When international entrepreneurs ask me about establishing a company in Switzerland, the conversation inevitably turns to share capital requirements.
Disclaimer: This information is general in nature and does not replace professional consultation. Corporate law and tax regulations vary by canton and individual circumstances. Consult a qualified Swiss attorney or tax advisor before making decisions.
When international entrepreneurs ask me about establishing a company in Switzerland, the conversation inevitably turns to share capital requirements. Over two decades of practice, I've guided more than 300 companies through registration, and one pattern remains constant: understanding share capital is not merely a bureaucratic formality—it's the foundation of your Swiss business structure.
Share capital (Aktienkapital in German, capital-actions in French) represents the monetary value shareholders commit to a company at incorporation. In Switzerland, this capital serves dual purposes: it provides operational funding and acts as a creditor protection mechanism, ensuring a minimum asset base against which creditors can claim in case of insolvency.
Capital of Switzerland: Bern and business capital explained
Switzerland's political capital is Bern, but the economic capital of the country lies in its robust corporate framework. When we discuss "capital" in a business context, we refer to share capital—the financial foundation required to establish and operate a company. This guide focuses on share capital requirements for AG (Aktiengesellschaft) and GmbH (Gesellschaft mit beschränkter Haftung), the two primary corporate forms used by international entrepreneurs entering the Swiss market.
Minimum share capital requirements: GmbH vs. AG in Switzerland
The choice between AG and GmbH often begins with capital requirements, but the decision extends far beyond the initial deposit. Swiss law establishes clear thresholds, yet the strategic implications differ significantly.
"GmbH requires CHF 20,000 fully paid; AG requires CHF 100,000, with at least CHF 50,000 paid at registration." — SIGTAX, 2025
GmbH suits small to medium enterprises and family businesses. The CHF 20,000 capital must be deposited in a Swiss bank consignment account and fully paid before submitting incorporation documents.
"Transfer of GmbH shares is typically restricted; AG shares are generally freely transferable unless otherwise specified in the articles." — Goldblum, 2025
AG accommodates larger enterprises and companies planning to attract investment. The minimum CHF 100,000 capital can be paid partially: CHF 50,000 must be deposited before registration, with the remainder callable by the board of directors. AG permits issuance of various share types—ordinary shares, preferred shares, shares with different voting rights—providing flexibility in corporate governance and investor protection.
From my experience advising international clients, the capital threshold is rarely the deciding factor. A tech startup planning Series A funding will choose AG despite the higher initial cost because venture capital firms expect the governance structure and share transferability that AG provides. Conversely, a consulting firm with stable revenue and no external investment plans will opt for GmbH to minimize initial capital requirements and maintain tight ownership control.
For companies exploring alternative financing models, consider reviewing our guide on ICOs in Switzerland.
Strategic and legal foundation of share capital
What is share capital and its economic role
Share capital is not a formality—it's an economic buffer, a guarantee for creditors, and an indicator of the company's seriousness.
"Share capital is the foundation of a company's structure and creditor protection under Swiss law." — Company Formation Switzerland, 2025
Swiss law distinguishes between three related concepts: subscribed capital (the total amount shareholders commit to contribute), issued capital (the actual capital created and recorded in the commercial register), and paid-in capital (the portion actually transferred to the company's bank account).
For an AG, you might subscribe CHF 100,000, issue CHF 100,000 in shares, but pay in only CHF 50,000 at registration. The unpaid CHF 50,000 remains a liability of shareholders, callable by the board when the company requires additional funding. This structure allows companies to preserve cash while maintaining the legal minimum capital base.
The economic role extends beyond creditor protection. Share capital establishes the company's financial credibility with banks, suppliers, and business partners. A company with CHF 100,000 registered capital signals greater stability than one with CHF 20,000, even if both have identical revenue.
The legal basis: capital regulations in the Swiss Code of Obligations
Disclaimer: This information is general in nature and does not replace professional consultation.
The Swiss Code of Obligations (CO) is the primary legislative act regulating all aspects of share capital. Articles 620 ff. govern AG requirements, while Articles 772 ff. address GmbH. These provisions define minimum capital amounts, formation procedures, rules for contributions in kind, and capital management protocols.
"AG requires a minimum of CHF 100,000 (at least CHF 50,000 paid); GmbH requires CHF 20,000 fully paid." — Chambers, 2025
Article 620 CO establishes the CHF 100,000 minimum for AG, with at least CHF 50,000 paid at registration. The company is liable for obligations only with its assets, not shareholders' personal property. Article 772 CO sets the CHF 20,000 minimum for GmbH, requiring full payment before registration. Members are liable only to the extent of their participation units.
Both forms permit contributions in kind—tangible assets like equipment or real estate, or intangible assets like intellectual property—after independent valuation.
"If non-cash contributions exceed 20% of capital or CHF 100,000, an independent auditor's attestation is required." — Lawyers Switzerland, 2025
This prevents founders from overvaluing assets to meet capital requirements without actual economic substance.
The legal framework underwent significant reform in 2023, effective 2025.
"The 'capital band' was introduced: the board can change capital within 50–150% for up to five years." — Glass Lewis, 2025
This modernization reduces procedural overhead for growing companies while maintaining shareholder oversight through the initial authorization.
For detailed information on Swiss corporate legal requirements, see our guide on Swiss company laws.
Capital formation procedure: step-by-step plan
The process of depositing share capital is strictly regulated and includes three main stages, ensuring transparency and security. Each stage has specific requirements and documentation, and failure to comply at any point will delay or prevent registration.
Step 1: opening a blocked account (capital deposit account)
Before registration, Swiss law requires founders to deposit share capital into a temporary capital deposit account (Sperrkonto or compte bloqué) held at a Swiss bank.
"Capital is deposited into a blocked account at a Swiss bank before company incorporation; the bank issues a confirmation." — Newco, 2025
This account serves multiple purposes: it demonstrates to regulatory authorities that capital exists, shows that funds are earmarked for the company, and provides official certification confirming the amount and origin of funds.
Banks typically require the following documents to open a capital deposit account: draft articles of association, identification documents of all founders (passport or national ID), proof of residence (utility bill, rental contract, or government document), shareholder registers, and Ultimate Beneficial Owner (UBO) declarations. The bank will conduct Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures, which can take four to eight weeks for non-residents.
The required deposit amounts as of 2025 are CHF 20,000 for GmbH (must be fully deposited) and CHF 50,000 for AG (half of the CHF 100,000 subscribed capital). The bank issues a capital confirmation certificate, mandatory for registration in the Swiss Commercial Register.
For detailed guidance on banking requirements, see our guide on how to open a bank account in Switzerland.
Step 2: depositing capital—cash or in-kind contributions
Cash contribution
The simplest method involves transferring cash from founders' personal or business accounts to the capital deposit account. The bank then provides a deposit certificate confirming the transfer. Swiss banks require that payments come from personal accounts of shareholders in accordance with their subscriptions to shares, ensuring traceability and AML compliance.
"The 2023 reform allowed share capital to be denominated in certain foreign currencies (e.g., EUR or USD)." — Chambers, 2025
Acceptable currencies are primarily Swiss francs (CHF). While the 2023 Code of Obligations reform introduced the possibility of non-CHF denominated share capital (EUR, USD, GBP, JPY), the company's financial statements and taxes remain in CHF, and the bank will convert non-CHF deposits to CHF at the prevailing rate. Most practitioners still recommend CHF deposits to avoid exchange rate complications and regulatory complexity.
Contribution in kind
Founders may contribute non-monetary assets such as equipment, machinery, real estate, intellectual property (patents, licenses), inventory, or securities. When the total value of in-kind contributions exceeds CHF 100,000 or represents more than 20% of total share capital, an independent auditor must conduct a valuation and issue an attestation report confirming the fair market value of the contributed assets.
In my practice, I've seen founders attempt to overvalue equipment or intellectual property to reduce cash requirements. This creates significant risk: if an auditor or tax authority later reassesses the asset value as lower than stated, the company may be found to have insufficient capital, triggering legal and tax consequences. The solution is straightforward—obtain a professional valuation report before incorporating when in-kind contributions exceed 20% of capital.
Step 3: obtaining bank confirmation and the notary's role
After capital is deposited, the Swiss bank issues an official capital deposit certificate (Bescheinigung über die Kapitaleinzahlung or Attestation de versement de capital). This certificate is a key document for the notary when certifying incorporation documents and registering the company in the Commercial Register.
A Swiss notary public must certify the company's foundational documents, including articles of association, shareholder resolution approving the capital contribution, and signatures of shareholders/founders. The notary verifies the identity of signatories, ensures legal compliance, and certifies that documents are authentic. This certification is a mandatory prerequisite for registration with the commercial register.
For assistance with document preparation, see our guide on drafting and vetting documents in Switzerland.
The entire process from opening the blocked account to obtaining the notary's certification typically takes six to ten weeks, significantly faster than the three to six months common in other jurisdictions.
Capital management and advanced scenarios
Partial payment of share capital: rules and implications
The concept of partial payment (liberation) applies primarily to AG.
"For AG, at least 20% of the nominal value of each share and a minimum of CHF 50,000 for the company must be paid." — Chambers, 2025
Swiss law requires that at least 20% of the nominal value of each share and all share premiums must be paid upon subscription, with a minimum total of CHF 50,000 for the company. The remainder can be called by the board of directors when the company requires additional funding.
Shareholders remain liable for the unpaid portion. If the company encounters financial difficulties or enters bankruptcy, the board can call the unpaid capital, and shareholders must pay the outstanding amount. This liability continues until the shares are fully paid or the company is liquidated.
Partial payment is not permitted for GmbH, which requires full payment of the CHF 20,000 minimum capital at incorporation.
Step-by-step guide to a capital increase in Switzerland
Capital increases follow a structured procedure with six main stages:
Step 1: Board resolution. The board of directors proposes a capital increase and calls a general meeting for shareholder approval. The increase must be certified publicly with a notary present at the meeting.
Step 2: Shareholder approval.
"Any capital increase requires shareholder approval and notarization before submission to the register." — Company Formation Switzerland, 2025
Shareholders approve the capital increase at the general meeting, deciding the amount and form (new shares or nominal value increase). Approval requires a majority vote.
Step 3: Amendment of articles of association. The company amends its articles to reflect the capital increase.
Step 4: Execution. The board executes the capital increase, typically within six months of the resolution.
Step 5: Notarization. The capital increase is notarized and documented officially.
Step 6: Commercial register entry. The change is registered with the Swiss Commercial Register, making it legally effective.
Ordinary capital increase involves a fixed amount decided by shareholders at the general meeting, executed promptly, often with subscription rights for existing shareholders. Authorized capital increase was abolished by the 2020 reform, replaced by the capital band allowing the board to adjust capital within a pre-approved range and timeframe without repeated shareholder approval. Conditional capital increase exists separately for convertible bonds or employee shares, requiring qualified majority approval.
The capital band permits flexibility for increases or decreases up to 50% of registered capital, valid for up to five years. This mechanism is particularly valuable for tech startups and growth companies that need to issue shares to employees or investors without convening shareholder meetings for each transaction.
For companies considering structural changes, see our guide on changing your business structure in Switzerland.
Capital reduction procedure
Capital reduction is a more complex procedure requiring protection of creditor interests. The general meeting must resolve the capital reduction, specifying whether by nominal value reduction and/or share cancellation, and indicate the use of the reduction amount (cash payment, offsetting, conversion to reserves or debt capital).
Creditor protection involves a single public notification in the Swiss Official Gazette of Commerce, replacing the previous three notifications. Creditors have 30 days to request security or freezing of claims. If requested, the company must secure creditor claims to the extent the capital reduction reduces coverage. An auditor must confirm the interim financial statements and findings related to the capital reduction, ensuring transparency and protection of creditors.
Special provisions allow capital reduction below the CHF 100,000 minimum temporarily ("harmonica") if immediately followed by a capital increase of at least the same amount for restructuring purposes. The Board of Directors prepares and executes the reduction by amending the articles of association in a public deed, with registration in the Commercial Register required within six months of the general meeting resolution.
Share capital at risk: managing bankruptcy and insolvency
When an AG or GmbH enters bankruptcy, the company is liable for debts with its assets, and share capital is used to cover obligations. After liquidation, debts are annulled except in cases of personal liability of management. Assets come under the control of bankruptcy administration.
Capital loss in Switzerland means the company's equity has fallen below half of the share capital, requiring notification and action by the board of directors according to Swiss corporate law. Over-indebtedness occurs when the company's liabilities exceed the value of its assets, which is grounds for initiating bankruptcy proceedings and mandatory notification to the court.
The board of directors must, upon occurrence of capital loss or over-indebtedness, immediately notify the court and take measures to restructure or liquidate the company to avoid personal liability. For AG/GmbH, shareholder liability is limited to their contribution. The capital is used to satisfy creditor claims in the order of priority established by law.
In my experience, the most critical moment is when the board recognizes capital loss or over-indebtedness. Delayed action exposes directors to personal liability for damages to creditors. The law requires immediate notification and either a restructuring plan or initiation of bankruptcy proceedings.
Swiss stamp duty
Switzerland imposes a stamp duty on the issuance of shares when a company is incorporated or increases its capital.
"Issuance tax on capital contributions is 1%, with the first CHF 1 million exempt." — Chambers, 2025
The tax applies to the fair market value of equity contributions to Swiss corporations, with an exemption on the first CHF 1 million of equity regardless of contribution timing (initial or subsequent).
The rate is 1% levied on the taxable amount above the CHF 1 million threshold. For example, if you incorporate an AG with CHF 150,000 capital, the first CHF 1 million is exempt, so no stamp duty applies. If you later increase capital to CHF 1.5 million, stamp duty of 1% applies to CHF 500,000 (the amount above CHF 1 million), resulting in CHF 5,000 tax.
The tax obligation arises when equity contribution is completed. A registered securities dealer accounts for the tax and forwards it to the Swiss Federal Tax Administration.
Withholding tax on dividends
When an AG or GmbH distributes profits to shareholders as dividends, Swiss federal withholding tax is applied at a standard rate of 35%.
"Dividends are subject to 35% withholding tax; double taxation treaties may reduce the rate." — Chambers, 2025
This tax is withheld by the company and remitted to tax authorities.
For Swiss residents, the tax is fully refundable when income is properly declared in the annual tax return. For non-residents, the rate can be reduced or partially refunded under bilateral double taxation treaties. For example, residents of the United States or Ireland may benefit from a reduced rate of 15% under applicable treaties.
Applications for refund must be submitted within three years from the date of withholding. The process requires documentation proving tax residency and compliance with treaty conditions.
Cantonal capital tax
Cantonal capital tax is an annual tax levied only at the cantonal and communal levels, not federally, based on a company's equity including nominal capital, paid-in surplus, retained earnings, and reserves. The tax base also includes, under thin capitalization rules, certain debt treated as equity.
Tax rates vary significantly by canton, with a typical range from 0.001% to 0.5%. For example, Zug, Geneva, and Zurich fall within this range. Some cantons provide credits against corporate income tax for capital tax paid, and reductions for qualifying participations, patents, or group loans.
For canton-specific guidance, see our guides on company establishment in Zug canton and company establishment in Zurich.
Incorrect valuation of in-kind contributions
Founders sometimes overvalue non-monetary contributions—equipment, intellectual property—to reach the minimum capital threshold without depositing cash. If an auditor or tax authority later reassesses the asset value as lower than stated, the company may be found to have insufficient capital, triggering legal and tax consequences.
The solution is straightforward: obtain a professional valuation report and independent auditor attestation before incorporating when in-kind contributions exceed 20% of capital. The cost of the valuation (typically CHF 2,000 to CHF 5,000) is minor compared to the risk of regulatory rejection or future liability.
Errors in opening the blocked account procedure
Depositing capital directly to the company's operating account instead of a temporary capital deposit account, or failing to obtain a bank certificate before registration, will result in rejection of the incorporation application by the commercial register. This delays registration and creates complications with tax and employment contracts.
Work with a Swiss bank and ensure the deposit account is explicitly labeled as a "capital deposit account" (Sperrkonto). Obtain the bank certificate before notarization.
For practical banking guidance, see our guide on how to open a bank account in Switzerland.
Ignoring cantonal differences in taxation
Assuming all cantons have identical capital tax rates, stamp duty rules, or registration fees leads to underpayment or overpayment of cantonal taxes and missing local compliance deadlines. Consult the specific canton's tax authority (Steuerverwaltung or Administration Fiscale) before incorporation. Rates vary by canton; Zurich, Geneva, and Zug have different frameworks.
For example, Zug offers lower capital tax rates and corporate income tax rates than Geneva, but Geneva provides better access to international organizations and multilingual talent. The choice depends on your business model and strategic priorities, not solely on tax rates.
Compare cantonal options using our guides on company establishment in Zug canton and company establishment in Zurich.
Insufficient planning for future capital needs
Incorporating with the bare minimum capital (CHF 100,000 for AG or CHF 20,000 for GmbH) without considering that the company may need additional capital for growth, acquisitions, or credibility with lenders creates future complications. Capital increases trigger shareholder meetings, dilution of ownership, and administrative and tax costs.
Assess long-term capital needs before incorporation. While higher initial capital triggers higher stamp duties (if above CHF 1 million), it may be cost-effective if you anticipate growth. Alternatively, use an authorized capital band to maintain flexibility without repeated shareholder approvals.
Conclusion
Share capital in Switzerland is not merely a regulatory threshold—it's the foundation of your company's legal structure, creditor protection mechanism, and strategic tool for growth. Whether you choose GmbH with its CHF 20,000 fully paid requirement or AG with its CHF 100,000 minimum and flexible payment structure, understanding the requirements, procedures, and tax implications ensures a smooth registration process and positions your company for long-term success.
The 2023 reforms, effective in 2025, have modernized Swiss corporate law, introducing the capital band mechanism and streamlining capital management procedures. These changes make Switzerland even more attractive for international entrepreneurs seeking a stable, efficient jurisdiction with access to European markets and world-class financial infrastructure.
For personalized consultation on share capital requirements, company formation, or strategic capital management, contact SwissFirma at +41 44 51 52 591 or visit swissfirma.com.
What are the costs associated with share capital formation?
The costs include: bank fees for opening and maintaining the capital deposit account (CHF 200-500), notary fees for certifying incorporation documents (CHF 1,000-2,500 depending on complexity), commercial register fees (CHF 600-800), stamp duty (1% on capital above CHF 1 million), and professional fees for legal and accounting services (CHF 2,000-5,000).
For in-kind contributions exceeding 20% of capital, add auditor valuation fees (CHF 2,000-5,000 or more depending on asset complexity). Total costs for a standard AG incorporation with CHF 100,000 cash capital typically range from CHF 4,000 to CHF 8,000, excluding ongoing compliance and tax advisory fees.
How long does the capital formation process take from start to finish?
The entire process from opening the blocked account to obtaining the notary's certification and completing commercial register entry typically takes six to ten weeks. This timeline assumes all documentation is prepared correctly and the bank's KYC/AML procedures proceed without complications.
For non-residents, the KYC/AML process can extend the timeline by four to eight weeks, particularly if the bank requires additional documentation or clarification on the source of funds. Working with experienced Swiss legal and banking advisors can significantly reduce delays and ensure smooth processing.
Can share capital be reduced below the legal minimum temporarily?
Yes, under the "harmonica" provision, share capital can be reduced below the legal minimum (CHF 100,000 for AG, CHF 20,000 for GmbH) temporarily if immediately followed by a capital increase of at least the same amount for restructuring purposes.
This mechanism is used when a company needs to write off accumulated losses and recapitalize. The reduction and increase must be resolved simultaneously at the same general meeting, and the entire process must be completed within six months. The company must maintain creditor protection throughout the process, including notification in the Swiss Official Gazette of Commerce and securing creditor claims if requested.
Can share capital be used immediately after company registration?
Yes, with caveats. Once the company is registered with the commercial register and the capital deposit account is released (typically immediately after registration), the company gains full ownership of the capital and may use it for any lawful business purpose. The bank issues an official document confirming the presence of capital, after which the amount remains blocked until registration is complete.
The registration process takes two to three weeks from the day the necessary set of documents is received. After registration in the register, access to funds opens automatically. However, the company must maintain minimum solvency and cannot distribute all capital to shareholders while insolvent.
For legal interpretation of capital use, see our guide on Swiss company laws.
In what currency can share capital be deposited besides CHF?
The minimum share capital for GmbH is CHF 20,000 (fully paid at registration), for AG—CHF 100,000 (CHF 50,000 at registration).
Capital is deposited in a special bank account at a Swiss bank before company incorporation. Swiss banks require that payments come from personal accounts of shareholders in accordance with their subscriptions to shares. While the 2023 Code of Obligations reform introduced the possibility of non-CHF denominated share capital (EUR, USD, GBP, JPY), the company's financial statements and taxes remain in CHF, and the bank will convert non-CHF deposits to CHF at the prevailing rate.
Updated: Non-cash contributions, including digital assets, may be possible as contributions in kind subject to independent valuation and notary procedures. Verify with your bank and notary for current requirements and documentation.
How to confirm the origin of funds for share capital?
Swiss banks require documentary confirmation of fund sources through tax returns (three years), asset sale agreements, registry extracts, and notarial documents in accordance with AML/KYC procedures regulated by FINMA.
The typical document package includes: notarized copy of passport, proof of address, tax returns for three years, bank statements, employer reference, incorporation documents, real estate documents, letter from attorney or accountant. For investors (real estate, shares, inheritance), sale agreements, registry extracts, brokerage reports, notarial inheritance documents, and tax returns are required.
The verification process includes initial screening and risk assessment, document verification, registry inquiries, and history reconciliation. For complex cases—video interviews and contacts with third parties. Duration: two to three weeks to several months. FINMA requires banks to conduct Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures with maximum rigor; the bank cannot accept a client without explanation of capital origin.
What happens if the company cannot form the minimum required share capital?
Registration will be impossible. The notary will not be able to certify documents, and the Commercial Register will refuse entry without confirmation from the bank of full payment of the minimum required capital.
The minimum share capital must be fully deposited before registration in a special bank account at a Swiss bank. Capital remains frozen until the registration procedure is completed. Company incorporation occurs through execution of an incorporation agreement in notarial form. Without capital payment, the notary cannot execute the document, as this violates corporate law requirements.
The company acquires legal personality only after registration in the cantonal Commercial Register (Handelsregisteramt). The register requires confirmation of capital payment before entry. The registration procedure takes two to three weeks. Without payment, the stage does not begin.
What are the main differences between ordinary and authorized capital increases?
Ordinary capital increase involves a fixed amount decided by shareholders at the general meeting and executed promptly, often with subscription rights for existing shareholders. The 2020 reform abolished authorized capital increase, replacing it with the capital band mechanism that allows the board to adjust capital within a pre-approved range (up to 50% of registered capital) for up to five years without repeated shareholder approval.
The capital band provides flexibility for growing companies, particularly tech startups that need to issue shares to employees or investors without convening shareholder meetings for each transaction. Conditional capital increase exists separately for convertible bonds or employee shares and requires qualified majority approval.
How does the capital band mechanism work in practice?
The capital band, introduced by the 2023 reform effective in 2025, permits the board of directors to increase or decrease share capital within a range of 50% to 150% of the registered capital for up to five years. This mechanism requires initial shareholder authorization at the general meeting but eliminates the need for repeated approvals for each capital adjustment within the authorized range.
For example, if your AG has CHF 100,000 registered capital and shareholders authorize a capital band, the board can adjust capital between CHF 50,000 and CHF 150,000 without additional shareholder meetings. This flexibility is particularly valuable for companies in growth phases or those issuing employee stock options.
What documentation is required for in-kind contributions?
When in-kind contributions exceed CHF 100,000 or represent more than 20% of total share capital, Swiss law requires an independent auditor to conduct a valuation and issue an attestation report confirming the fair market value of the contributed assets. The auditor must be licensed and independent of the company and its founders.
The documentation package typically includes: detailed description of the asset, professional valuation report, auditor's attestation, transfer agreement, proof of ownership, and incorporation into the articles of association. For intellectual property, additional documentation such as patent certificates, trademark registrations, or licensing agreements may be required.
Can a foreign company contribute assets as in-kind capital?
Yes, foreign companies can contribute assets as in-kind capital to a Swiss AG or GmbH, subject to the same valuation and attestation requirements as domestic contributors. The assets must be transferable under Swiss law and properly valued by an independent auditor.
Additional considerations for foreign contributors include: compliance with cross-border transfer regulations, currency conversion at the time of contribution, potential tax implications in both jurisdictions, and documentation translated into German, French, or Italian (depending on the canton). Consult a Swiss attorney to ensure compliance with all requirements.
What happens to unpaid share capital if a shareholder leaves the company?
For AG, if a shareholder transfers shares with unpaid capital, the liability for the unpaid portion transfers to the new shareholder. However, the original shareholder remains jointly liable with the new shareholder for three years from the date of transfer and registration in the share register.
For GmbH, all capital must be fully paid at incorporation, so this scenario does not arise. If a member transfers participation units, the transfer agreement should specify any outstanding obligations, though legally all capital should already be paid.
How does share capital affect corporate tax rates in Switzerland?
Share capital itself does not directly affect corporate income tax rates, which are determined by canton and municipality. However, share capital does affect cantonal capital tax, an annual tax levied on the company's equity (including nominal capital, paid-in surplus, retained earnings, and reserves).
Capital tax rates vary by canton from 0.001% to 0.5% annually. Some cantons provide credits against corporate income tax for capital tax paid, effectively reducing the overall tax burden. Additionally, higher share capital may improve the company's creditworthiness and access to favorable financing terms, indirectly affecting financial performance.
What are the consequences of capital loss or over-indebtedness?
Capital loss occurs when the company's equity falls below half of the share capital. Over-indebtedness occurs when liabilities exceed assets. Both trigger mandatory notification and action requirements for the board of directors.
Upon capital loss, the board must immediately convene a general meeting and propose measures to restore equity or restructure the company. Upon over-indebtedness, the board must immediately notify the court and prepare interim financial statements. If the company cannot demonstrate positive going-concern value or obtain creditor subordination agreements, the court will initiate bankruptcy proceedings.
Directors who fail to act promptly face personal liability for damages to creditors and potential criminal prosecution for mismanagement. The law requires immediate notification and either a restructuring plan or initiation of bankruptcy proceedings.
