Holding Company in Switzerland

Switzerland stands as a compelling and competitive destination for establishing a holding company, particularly in scenarios involving company acquisitions or forming corporate groups. This piece delves into the tax benefits and implications of establishing a holding company in Switzerland. It also offers an overview of relevant corporate considerations for those contemplating Switzerland as a potential location, with attention to recent legal amendments, including aspects related to consolidated financial reporting.

Introduction – Legal Framework

In Swiss corporate law, a Swiss holding company is defined as a company primarily engaged in holding participations in other entities. Unlike specific legal provisions for holding companies, Swiss corporate law perceives a Swiss holding company as adopting one of the general legal forms available under Swiss law. Each subsidiary held by a Swiss holding company is treated as legally independent. In contrast, Swiss tax law has devised a distinct legal concept for Swiss holding companies known as the “holding status,” subject to fulfillment of specific conditions outlined in cantonal tax legislations.

Corporate Law Aspects

Swiss holding companies commonly take the legal forms of joint-stock corporations or limited liability companies. Experience suggests that holding substantial participations often leads to the adoption of joint-stock corporation status due to advantages such as confidentiality and suitability for capital market transactions. This article concentrates solely on Swiss holding companies structured as joint-stock corporations.

The selection of a company name is typically flexible but subject to certain constraints. The name must be truthful, non-misleading, and not against public interest. Additionally, it should be distinguishable from existing company names and include the legal form indicator such as “Ltd” (“AG”/”SA”) for joint-stock corporations.

The minimum nominal share capital for a Swiss holding company established as a joint-stock corporation is SFr100,000 . Shares may be bearer shares or registered shares, with a minimum nominal value of SFr0.01.

Incorporation of a Swiss Holding Company as a Joint-Stock Corporation

Establishment of a Swiss holding company in the form of a joint-stock corporation involves a founders’ meeting, conducted in the presence of a notary public. During this meeting, founders adopt the articles of association, nominate board members and auditors (if any). Minutes of the meeting and articles of association are then filed with the relevant commercial register for registration.

Organizational by-laws, detailing internal corporate structure and governance, are typically adopted alongside articles of association. These are mandatory only if management powers are delegated. Founders must contribute at least the nominal share capital before the meeting. Contributions can be made in cash, in-kind, or through acquisition of assets.

Financial Reporting and Compliance

Apart from standalone financial statements, Swiss holding companies controlling other entities must prepare consolidated financial statements under specific conditions. Compliance with financial reporting standards and regulatory requirements is essential for maintaining transparency and accountability.

Corporate Bodies

Shareholders’ Meeting

The shareholders’ meeting holds supreme authority in a joint-stock corporation. It possesses powers such as amending articles of association, appointing/removing board members and auditors, approving financial statements (including consolidated ones), and determining profit allocation. Unless stipulated otherwise, resolutions are passed by an absolute majority of voting rights represented. Certain resolutions, like amending purpose or relocating the registered seat, necessitate two-thirds of voting rights represented and an absolute majority of nominal share value.

Board of Directors

The board of directors manages the company, comprising one or more members, with at least one member authorized for representation. While members need not be Swiss citizens, Swiss law mandates Swiss residency for at least one member authorized for representation. The board can delegate most powers but retains crucial duties. Legal scholars propose subsidiary delegation of management duties and powers, outlined in organizational by-laws.

Auditor

Apart from standalone financial statements, companies controlling others must prepare consolidated financial statements unless specific conditions are met. Consolidated statements are mandatory if shareholders demand or necessary for financial assessment. The decision to prepare consolidated financial statements hinges on meeting certain financial thresholds over consecutive years or shareholder demand. Additionally, consolidated statements may be required for a reliable financial assessment.

Conclusion

Establishing a holding company in Switzerland offers various advantages, particularly in terms of tax benefits and legal flexibility. Understanding the legal framework, corporate governance, and financial obligations is crucial for those considering Switzerland as a holding company location. By adhering to legal requirements and leveraging available options, companies can optimize their operations and financial structures within the Swiss regulatory framework.

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