The Gesellschaft mit beschränkter Haftung [limited liability company] (GmbH) (OR Art. 772-827) stands for a mixture of the AG and general partnership. This legal form is ranked third in the Swiss corporate landscape with over 60,000 GmbHs, whereby the curve of new formations is rising sharply thanks to the low minimum capital of only CHF 20,000.

The new GmbH law, which entered into force in the beginning of 2008, has rendered significant innovations with this legal form. According to the new GmbH law, if one or more natural persons or trading companies with a certain amount of capital become established as a firm, then a GmbH is created.

Every shareholder with at least one original capital contribution is involved in the corporate capital (share capital). As of late, these are also negotiable. A written agreement between the respective parties suffices for this purpose. A public authentication is no longer stringently prescribed.

The minimum share capital of CHF 20,000 has to be deposited to the full extent or covered through contributions in kind. The previous joint and several liability amongst the individual shareholders is omitted through the complete deposit of share capital. A maximum limit for the share capital has been eliminated in the course of this reform. The minimum investment per shareholder – in cash or as contribution in kind – is CHF 100, in which case the number of original capital contributions per shareholder is also no longer subject to any restriction. The owners of the respective contributions must be recorded by name in the commercial register.


Liability provision

The company is liable for its debts on an unlimited basis; this is why the designation “limited liability” is slightly irritating. However, the maximum limit to which the individual shareholders must be liable for is the double nominal value of the respective original capital contribution. The additional and subsidiary obligations for any original contribution can be individually defined and specified.

The addendum “GmbH” or “mbH” has to be clearly evident; otherwise the company name can be freely selected. The GmbH has to employ a state-supervised trust and auditing agency, just like the AG. Larger GmbHs, which exceed two of three clearly defined and specified limits in two successive years, must absolutely implement an ordinary audit. The following are to be seen as limits here: balance sheet total of more than CHF 10 million, turnover of more than CHF 20 million, and 50 or more full-time positions. All other GmbHs basically go through the limited audit. If all shareholders give their consent, small GmbHs (less than 10 full-time positions) can also completely do without the audit.

Double taxation is also known with the GmbH. The net profit is taxable, and the individual shareholders must then pay tax on the distributed profit as income. Wealth taxes are to be paid on the share capital through the GmbH as through the shareholders.


Prerequisites during the formation

One or more natural persons and/or legal entities will be required in order to be able to establish a GmbH. As with the AG, it can also be managed as a “one-man GmbH” — however, steps are also only taken here if a lawsuit is filed. If the investors remain anonymous, third persons can also be employed as representatives under consideration of certain conditions.

The formation expenses are higher than with a partnership but somewhat lower than with an AG. The business management of the GmbH behaves analogous to the executive board of the AG. All shareholders are actually entitled and obligated to collective business management and representation, in which case they may be represented by a person who absolutely has to have their residence in Switzerland. Managers – just like executive board members of the AG – are personally liable for intentional or negligent breach of duty caused on their part.


Highest body: the shareholders’ meeting

The highest body of the GmbH – the shareholders’ meeting – determines the respective statutes, the business managers and the control agency. It approves the profit and loss account as well as the balance sheet, decides on the appropriation of profit and discharges the business manager or managers. GmbHs are basically subject to the same accounting provisions as the AGs.