Types of Business Activities in Switzerland

There are two types of corporation at the forefront of business activity in Switzerland: “Corporation (SA/AG)” and “Limited Liability Company (Sàrl/GmbH)”.

These two kinds of legal entity offer the following advantages:

• Liability and risk limited to capital
• Simplified transferability of participation rights/shares
• Regulated representation rights
• Comparable with foreign legal entities such as the German GmbH, the US “Joint Stock Company”, the English “Limited Liability Company” and the French “Société Anonyme”.

Besides forming an “AG” or a “GmbH”, it is also possible to have a branch of a foreign corporation inscribed in the Commercial Register, or to set up a private company which is not a legal entity in its own right.

Sole proprietorship is established by a private individual commencing a commercial activity. The founding procedure is fairly easy. No minimum capital is required. The name of the firm consists at least of the owner’s surname (art. 944 et seq. CO). The owner has unlimited liability, including private assets. Entry in the Commercial Register is compulsory if the turnover exceeds the amount of CHF 100,000 per year. A sole proprietorship inscribed in the Commercial Register needs to meet the regulatory requirements for mandatory accounting (double-entry accounting). Without registration accounting is limited to recording earnings and expenditures, and retaining receipts (art. 957 CO).

Business relationships can, of course, also be set up on a purely contractual basis, e.g. as that of an agency or sole distributorship. There are numerous ways to structure agreements of that kind under Swiss contractual law, which recognizes only a small number of restrictions regulated by compulsory law.

Free competition in business is protected by the Swiss Cartel Law. The Swiss Anti-Trust Commission is responsible for applying and enforcing those stipulations (www.weko.admin.ch).

Comparative Overview