What is the main source of law authorising this entity form?

Companies Law (art. 772 et seq. CO).

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

The LLC is a company with one or more natural persons or companies as company members and which generally pursues commercial purposes. The LLC has its own legal personality and exists in almost all cases for an unlimited period of time. It is governed by its articles of Association (“AoA”).

(Maximum) period of existence

Creditors can only seize the company’s assets. The company members are not personally liable if the nominal capital is fully paid up, unless the AoA provides for additional and ancillary obligations. Company members may be required under the AoA to make additional contributions of up to twice the nominal value of their ordinary contribution shares. Each company member is authorised to manage the company jointly with the others as managing directors. However, this is optional and management duties can be delegated to another company member or to third parties.

Governing document(s)

The LLC combines elements of both a capital-related legal entity and person-related partnerships, such as, in particular, the following:

• except if stated otherwise in the AoA, all company members are managing directors (the management board being the operational body);
• the AoA can provide veto rights for each company member (independently from the percentage of contribution shares held);
• company members have a duty of loyalty towards the LLC;
• Company members may be subject to non-competition provisions as set forth in the AoA;
• under certain circumstances, company members have (independently from their respective share holdings) a right of exit (i.e.
• redemption / repurchase of their contribution share by the Company). The right of exit can be by operation of law (in case of "important reasons"), and can be expanded by providing for specific exit rights in the AoA;
• on the other hand, a company member can, likewise, be excluded (whereupon the Company has the right to repurchase their contribution share), both by operation of law ("important reasons") or pursuant to specific cases stated in the AoA.

Liability of incorporators / shareholders

Furthermore, each company member may

• under certain circumstances challenge in court a resolution passed by the general meeting;
• bring in an action for liability against the managing directors (either on its behalf, or on behalf of the Company);
• at any time, request information on all company matters. This also includes the right to inspect the accounting records and the company file. If the company’s financial statements are audited, this inspection right is restricted to the extent that the member has to demonstrate a legitimate interest.

(Governing) bodies

Historically, due to its semi-personal structure and smaller capital requirements, the LLC was mostly chosen for smaller business ventures. After a revision of the law, this has changed. By end of 2024, there were 269'617 LLCs in Switzerland which makes it the most widely used entity for doing business (followed by Ltds. (243'658) and single-member businesses (175’260)).

Other particularities

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions etc.)?

Yes, LLCs can be involved in international transactions like a share corporation. It can merge, buy other companies or be bought, can be converted in e.g. a share corporation etc.

Can this type of entity be publicly listed or held, or its securities be issued to members of the public?

The (contribution) shares of the LLC cannot be listed and traded on the stock market like the shares of a Ltd. However, it is possible for third parties such as a corporation or a natural person, to acquire units of an LLC in a private sale or to participate in a capital increase.

Can this type of entity be used for a non-profit or charitable organization?

The LLC is designed for commercial purposes and generally operates as a commercial company on a profit-orientated basis. A non-economic objective can nevertheless be agreed by the company members.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required, Involvement of notary, company register, governmental authorities, Timing (estimate), Main costs, including registration and similar fees (excluding legal fees), Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

The following points are required for the formation of an LLC:

• Act of incorporation: recording the unanimous will of the founder/founders in a public deed;
• AoA (minimum content: name and registered office of the company, the purpose of the company, the amount of the share capital and the number and nominal value of the ordinary contribution shares, the form of the company’s communications with its members);
• Subscription of the contribution shares (the minimum capital amounts to Swiss Francs (“CHF”) 20,000 and must be fully paid up);
• Appointment of the governing bodies (members' general meeting, and if required an auditor, managing directors);
• Entry in the commercial register: The signatures of the authorised signatories to be registered in the commercial registry must be certified by a notary.

The formation costs are made up as follows:

• capital contribution of at least CHF 20’000;
• Consultancy costs and notary fee: CHF 2’000 - CHF 5’000;
• Fee for entry in the commercial register: depending on the formal capital, mostly below CHF 1’000.

The timeframe for the incorporation of the LLC is 7 to 20 working days after payment of the nominal capital, depending on the complexity of the company’s documents and the workload of the commercial register.

Minimum number of incorporators / shareholders and residency requirements

The LLC must be founded or held by at least one natural person or legal entity. There is no upper limit of company members and no residency requirements.

Minimum number of directors (or other applicable officers) and residency requirements

At least one managing director or a director of the LLC must be resident in Switzerland. There are no other residency requirements.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

The nominal capital shall amount to at least 20,000 CHF, paid in full, in to a blocked account of a Swiss bank. It will be released as soon as the company is registered in the commercial registry.

Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?

Company members can be represented during the incorporation by a proxy holder. Such proxy must be notarized; in case of a foreign notarization an apostille is needed.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

An LLC receives a company identification number (“UID”) when it is entered in the commercial register.

What is the title of the applicable company registry?

Every LLC must be entered in the commercial register of the Canton in which it is domiciled. This register is run by a governmental office of the respective Canton and not by federal authority although there is also a federal register supervising the registrations.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles or other formation document, Articles or other formation document, Group structure, Share capital, Directors, Accounts, Insolvency, good-standing, liquidation, Liens and encumbrances on the shares, Liens and encumbrances on assets of the entity, Other (e.g. litigation, tax matters)

The application to the commercial register must include among others the following afterwards publicly available information:

• the public deed of incorporation which mentions the company members;
• the AoA;
• if the managing directors have been elected, proof that the nominees have accepted the election;
• if applicable, proof that the statutory auditors have accepted their election;
• if applicable, the resolution of the founders or, if the AoA provide for this, the resolution of the managing directors on the regulation of the chairmanship of the management;
• if applicable, the resolution of the founders or, if the AoA so provide, the resolution of the managing directors on the appointment of further persons authorised to represent the company;
• in the case of cash contributions: a certificate stating the bank at which the contributions are deposited, provided that the bank is not named in the public deed.

It is not necessary to disclose the beneficial owners (the company must have this information at any time on file), to file the accounts or to present the group structure. This information is not public.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

Unless otherwise stipulated in the AoA and in minutes of the members' meetings, all company members are jointly authorised to manage the company. Every company member is therefore also a managing director and does not have to be elected as such subject to any provisions in the AoA to the contrary (which is mostly the case in practice).

Management authorisation can also be delegated to a third party.

The managing directors have the following inalienable and irrevocable duties:

• the overall management of the company and issuing the required directives;
• determining the organisation in accordance with the law and the AoA;
• organising the accounting, financial control and financial planning systems as required for the management of the company;
• supervising of the persons to whom management responsibilities were delegated, in particular with regard to compliance with the law, AoA, regulations and directives;
• preparing the annual report;
• preparing for the members’ general meeting and implementing its resolutions;
• filing an application for a debt restructuring moratorium and notifying the court in the event that the company is overindebted.

How are the members of the executive body appointed, dismissed and replaced?

The managing directors are elected or dismissed by the members at a general meeting of the members. If an LLC has not delegated the management, the members must pass a resolution of a general meeting of the members if a company member wishes to step down as managing director. If they decide against approval of the resolution, the company member must sell his/her/its contribution shares or sue for rescission of the company since every member is automatically a managing director. If provisions in the AoA permit the delegation of the management of the company to one or more company members or to a third party, they may resign as managing director at any time. In addition, management may be temporarily revoked from a managing director who has been elected by the members at a general meeting. In the case of executive company members, however, dismissal is only possible through a court decision for good cause.

Is it possible to appoint corporate directors or must all directors be natural persons?

There are no corporate directors. Managing directors may only be natural persons. If an entity is involved in an LLC, it must designate a person to act as the entity's representative in the management board.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

No, there is no such requirement.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The members of an LLC meet to deliberate and vote upon matters at a general meeting of the members. The members have the following inalienable and irrevocable duties:

• to amend the articles of association;
• to appoint and the remove the managing directors;
• to appoint and remove the members of the external auditor;
• to approve the management report and the consolidated accounts;
• to approve the annual accounts and the resolution on the allocation of the balance sheet profit, and in particular to set the dividend and the shares of profits paid to managing directors;
• to pass resolutions on repaying capital reserves;
• to determine the fees paid to managing directors;
• to discharge the managing directors;
• to consent to the assignment of capital contributions or to recognise company members as having the right to vote;
• to consent to the creation of a charge over capital contributions where the AoA so provides;
• to pass resolutions on the exercise under the articles of association of rights of first option, pre-emption or purchase;
• to authorise the managing director to acquire the company's own capital contributions for the company or to approve such an acquisition;
• to issue detailed regulations on obligations to make additional material contributions where the articles of association make reference to such regulations;
• to consent to the activities of the managing directors or company members that are contrary to the duty of loyalty or the prohibition of competition, where the articles of association waive the requirement of the consent of all company members;
• to decide on whether an application should be made to the court to exclude a company member for good cause;
• to exclude a company member on grounds provided for in the articles of association;
• to dissolve the company;
• to approve transactions carried out by the managing directors that require the consent of the members’ general meeting under the articles of association;
• to decide on matters that are reserved to the members at a general meeting by law or by the articles of association or which are placed before it by the managing directors.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Certain resolutions require unanimity of all members, including those not participating in the general meeting (e.g. opting-out from limited audit; retroactive introduction of veto rights).

The quorum for special resolutions has a double threshold: (1) 2/3 of the votes cast at a meeting, and (2) an absolute majority of the entire nominal capital. The quorum applies, for example, to:

• Amendment of the corporate purpose;
• Capital increases;
• Dissolution of the company (including sale of substantially all of the Company's assets);
• Mergers, de-mergers and conversions of the company;
• Exclusion of a company member, respectively application to the courts to exclude a company member.

Ordinary resolutions (i.e. every resolution that is not mentioned above or other resolutions which do not require a higher quorum by the AoA;), require absolute majority of the votes cast at a meeting, e.g. for:

• appointment and removal of general managers;
• appointment and removal of auditors;
• amendment of the AoA;
• approval of financial statements;
• payments of dividends.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

As a shareholder of a share corporation, also a company member of a LLC must notify the company of the beneficial owner of his/her/its contribution shares if he/she/it reaches or exceeds 25% of the share capital or votes.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

As a legal entity, an LLC is required to keep accounts and to establish a business report. The annual statements are part of such report and consist of the balance sheet, the profit and loss statement and the appendix.

Following their approval by the management board, the annual accounts (and consolidated accounts) together with the audit report must be approved by a vote of the members at a general members’ meeting.

Is the entity permitted to determine its own financial year?

Generally, a financial year comprises twelve months and corresponds to the calendar year (1 January to 31 December). However, if necessary, the company can determine different dates for the beginning and the end of the financial year.

Is the entity subject to any statutory (external) auditor obligations?

If an LLC exceeds two of the following thresholds in two consecutive financial years, it must submit to anaudit with a higher level of scrutiny:

• balance sheet total of CHF 20 million,
• sales revenue of CHF 40 million,
• 250 full-time positions on annual average.

An ordinary audit must be carried out if company members who represent at least 10 per cent of the share capital so request.

If the requirements for an ordinary audit are not met, the company must have its annual accounts reviewed by an external auditor in a limited audit.

With the consent of all the company members, a limited audit may be dispensed with if the company does not have more than ten full-time employees on annual average.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

Apart from the functions already mentioned, there is no need to appoint other persons as listed in the question.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

There is no official English term but the published translation uses the term ‘capital contribution’ for ownership interests. We deem “contribution share” a better translation.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

Yes, it is possible to create contribution shares with preferential rights, e.g. granting preferred dividend or liquidation payments.

What documentation is required for the transfer of ownership interests?

See question 30.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

The following documents are required:

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• Commercial register application: In this application, it is requested that the changes relating to the contribution shares and, if necessary, to the management and signatory authorisation be entered in the register;
• An assignment agreement in writing (no notarization required) relating to the transfer of the shares; usually, the parties draft an elaborate share purchase agreement and submit only a shortform of it to the commercial registry;
• Minutes of the members’ general meeting: In principle, the company members must authorise the transfer of ordinary shares unless the AoA expressly waives such authorisation requirement;
• If applicable, identification of foreign legal entities: An extract from the foreign commercial register (certified by the competent office at the place of registration of the principal place of business as of the most recent date) or, if such an extract is not available, an equivalent document confirming the legal existence of the legal entity must be provided for legal entities that are company members and that have their registered office outside Switzerland. The extract must be supplemented with an apostille or over-certification.

Are there any applicable stamp duties imposed when transferring ownership interests?

Generally, there is no stamp duty for transactions with a value below CHF 10’000’000. However, there is a stamp duty to be paid upon incorporation for equity exceeding CHF 1'000'000.

How are shares issued? (including information on payment obligations, registration requirements)

Usually, no certificates are issued although the issuance of certificates would be possible.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

Yes, the capital contributions may also be paid in kind or offset. In this case, a written report must be prepared on the nature and condition of the contribution in kind and the appropriateness of the valuation or, in the case of offsetting, the existence of and possibility to offset the respective claim. The report needs to be audited by a licensed auditor and attached to the application to the commercial register.

Yes, contribution shares can be issued for a price of the nominal value plus a premium. In addition, it is also possible to make payments into the company’s equity without receiving any additional ownership interests.

No, the capital contribution must be paid-in fully.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

A company may acquire its own capital contributions only if freely disposable equity of a value equivalent to the required funds is available and the total nominal value of these capital contributions does not exceed ten per cent of the nominal capital. Where capital contributions are acquired in connection with a restriction on transfer or the departure or exclusion of a member, the maximum amount that may be acquired is 35 per cent. The capital contributions in excess of 10 per cent of the nominal capital must be sold within two years or cancelled by means of a reduction in capital.

The nominal capital may be reduced to less than CHF 20’000 provided it is at the same time increased again at least to this amount. Reductions from a higher amount to at least CHF 20’000 are possible all the time by changing the AoA with a public deed.

Any requirements with respect to distributions to shareholders?

In the case of an LCC, the company members have a claim to profit proportionate to their capital contribution, unless otherwise agreed in the AoA. Dividends may only be fixed after the allocations have been made to the statutory retained earnings and the voluntary retained earnings. Interest on the contribution share capital must not be paid.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

As a person-related form of company, typical aspects of the company members' agreement can be regulated directly in the AoA of the LLC, in particular the establishment and structuring of pre-emptive or purchase rights of the company members, non-competition clauses of the company members, contractual penalties and special regulations on the authorisation to manage the company. However, contractual provisions between the company members - analogous to a shareholders' agreement - are possible and are frequently in force. They are more difficult to enforce but have the advantage of not being public.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

Usually, fees are paid for the accounting, the auditing and the external directors. The amount of such fees depends on the size of the company.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

The LLC is taxed in the same way as a Ltd. As an independent legal entity, the profit and net equity of the LLC are taxed on the one hand. On the other hand, company members pay wealth tax on their shares and income tax on profit distributions (dividends). As the Swiss tax system is organised on a federal basis, the effective tax rates for companies vary from Canton to Canton and among municipalities. At federal level, the statutory tax rate amounts to 8.5 %, which results together with the municipality tax (if applicable) and the cantonal tax in a range between 11.85 % (unless the company has more than EUR 750 million turnover in which case the minimum according to the GloBE-rules is 15%) and approx. 21 %.

The Cantons (but not the federal government) also levy a tax on net equity according to the statutory accounts.

Summary of any specific matters, e.g. recent or prospective major legal developments

No, there are none.