Sàrl

The Sàrl, short for “limited liability company”, is one of the most popular legal forms for small and medium-sized enterprises (SMEs) in Switzerland.
It offers entrepreneurs a flexible structure that meets their needs, with liability limited to the contributions made by the partners.
In this text, we take a detailed look at the characteristics, advantages and obligations of the Sàrl under Swiss law.
We will also describe the key steps involved in setting up and running a limited liability company in Switzerland.

Characteristics of a limited liability company under Swiss law

Legal personality

The Sàrl is an autonomous legal entity with a legal personality distinct from that of its partners.
It is entitled to acquire rights and obligations, own property and take legal action.

Share capital

Incorporation of a limited liability company in Switzerland requires a minimum share capital of CHF 20,000, which must be paid up in full when the company is founded.
The capital is divided into shares with a par value of at least CHF 100.
Swiss law also permits contributions in kind, but their valuation must be carried out by an approved auditor and mentioned in the company’s articles of association.

The partners

A limited liability company can be set up in Switzerland by one or more individuals or legal entities, whether Swiss or foreign.
The company’s partners are liable for the company’s debts up to the amount of their contributions, which has the effect of limiting their personal liability.

The management body

The management of a limited liability company is entrusted to one or more managing directors, whether partners or third parties.
These managers are entered in the Commercial Register and have the power to represent the company in dealings with third parties.

Advantages of the LLC under Swiss law

Limited liability

A major advantage of the Sàrl is that partners’ liability is limited to the contributions they have made.
In the event of bankruptcy or company debts, partners’ personal assets cannot be seized, unless they have acted fraudulently or negligently.
This protection of partners’ personal liability is a key feature of the LLC, and a major attraction for entrepreneurs seeking to limit the risks associated with their business.

Flexibility

The Sàrl offers great flexibility in terms of management and decision-making.
The Articles of Association can include special rules on profit distribution, the transfer of shares and the powers of the managers, enabling the company to be adapted to the requirements of the partners.

Credibility

The Sàrl is often seen as a more rigorous and formal structure than the sole proprietorship, which can make it easier to obtain credit and establish business partnerships.

Obligations of a limited liability company under Swiss law

Bookkeeping

LLCs are required to follow Swiss accounting standards, which include the preparation of a balance sheet, income statement and notes.
The accounts must be kept for 10 years from the end of the financial year.
If LLCs exceed certain thresholds in terms of sales, balance sheet or number of employees, they must also have their accounts audited by an accredited auditor.

Annual General Meeting

A limited liability company must hold an annual meeting of shareholders, called a general meeting, at which the accounts are approved, the managing partners are appointed and other important decisions are taken.
The articles of association may also include other provisions relating to convocation, quorums and majorities.

Commercial register

The GmbH is required to register with the Swiss Commercial Register, where certain information, such as the company name, registered office address, share capital, managers and partners, is made public.
All subsequent changes, such as the sale of shares or a change of managers, must also be declared to the Commercial Register.

Creating a limited liability company under Swiss law

Drafting by-laws

The articles of association of a limited liability company set out the company’s management and operating rules.
They must be formalized in writing and signed by all partners.

Capital contribution

To set up a limited liability company, the partners must pay a minimum share capital of CHF 20,000, which can be either in cash or in kind.
If in-kind contributions are made, they must be valued by an accredited auditor.

Registration in the Commercial Register

Once the articles of association have been signed and the capital paid in, the limited liability company must be registered in the Commercial Register.
This formality is usually carried out by a notary, who ensures that the articles of incorporation comply with the law and that the company has been legally established.

Managing a limited liability company under Swiss law

Accounting and taxation

The limited liability company must meet its accounting and tax obligations by filing declarations with the cantonal and federal authorities.
It must pay income tax and capital tax, as well as VAT if its sales exceed CHF 100,000.

Employee relations

If the LLC employs workers, it must comply with Swiss labor law regulations, including minimum wages, paid vacations, working hours and conditions of termination.
In addition, the LLC must pay social security contributions for its employees and comply with occupational health and safety regulations.

Transfer of shares

The transfer of shares in a limited liability company is subject to specific conditions, such as approval by the other partners or registration in the Commercial Register.
The articles of association may contain special clauses to facilitate or limit the transfer of shares.

The Sàrl: a popular legal form for entrepreneurs

The Sàrl is a popular legal form for entrepreneurs in Switzerland due to its flexibility, limited liability and credibility, although it does entail obligations such as accounting, taxation and governance.
Before setting up a limited liability company, it is essential to understand its characteristics and legal implications, and to consult a lawyer or notary specialized in Swiss law for advice tailored to your situation.
To ensure the success and sustainability of your business, rigorous management and a thorough knowledge of legal obligations are essential once the limited liability company has been set up.