SMP

TAKE A SEAT

Switzerland

Typical legal form for start-ups

Aktiengesellschaft (AG)

Brief information

The AG is the typical legal form for Swiss start-ups. This is due to the greater flexibility concerning shareholder structures, the possibility of creating conditional capital for incentives and anonymity through non-existent disclosure obligations of the shareholding. If there is insufficient share capital at the time of formation, the company is usually converted into an AG at the latest in the "Series A" financing round.

The AG is monistically organized. It is managed by a Board of Directors. Apart from irrevocable tasks, management tasks may be delegated. The Board of Directors remains in charge of the company, which includes the definition of the strategy, the choice of the resources and the control of the management.
There is no separate supervisory body other than the Board of Directors. However, investors can be granted an observer seat status by contract. The observer may attend meetings of the Board of Directors but has no voting rights.

A PE/VC Fund may in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.
PE/VC Funds may not participate in the Board of Directors.

Participation in the Board of Directors is likely to be harmful, even in the case of delegation of management tasks, as the delegated tasks can always be revoked.

Other legal form

Gesellschaft mit beschränkter Haftung (GmbH)

Brief information

In the initial phase, Swiss start-ups usually choose the legal form of the GmbH. It offers the advantage of a lower minimum share capital of approx. EUR 17,500 (CHF 20,000) compared to the AG (approx. EUR 90,000, CHF 100,000). Moreover, the GmbH offers less flexibility in the investment and capital structure, which is why it is usually converted into an AG as of the "Series A" financing round.
A PE/VC Fund may, under certain conditions, supervise its investment through an observer seat.

The GmbH is also monistically organized. It is managed by a Board of Directors. Apart from irrevocable tasks, management tasks may be delegated. The Board of Directors remains in charge of the company, which includes the definition of the strategy, the choice of the resources and the control of the management.
There is no separate supervisory body other than the Board of Directors. However, investors can be granted an observer seat status by contract. The observer may attend meetings of the Board of Directors but has no voting rights.

A PE/VC Fund may in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer must not exercise any influence on the management decisions.
PE/VC Funds may not participate in the Board of Directors.

Participation in the Board of Directors is likely to be harmful, even in the case of delegation of management tasks, as the delegated tasks can always be revoked.

The information in our toolbox provides managers of private equity or venture capital funds with an initial overview of certain framework conditions in the respective country. It does not provide advice on the law of any country, neither does it substitute such advice. Before taking over a board seat in a portfolio company, it is at all times necessary to seek expert advice. Our team is happy to assist you with all questions at any time.