New Company Law: Important Changes to Capital Requirements
A company limited by shares (Aktiengesellschaft) must have a minimum share capital of CHF 100,000. At least 20% of this, or at least CHF 50,000, must be contributed when incorporating the company. The subscription is normally paid in Swiss francs.
New - share capital denominated in foreign currency
From 1 January 2023, share capital can also be denominated in a foreign currency, namely US dollars, Euros, British pounds or Japanese yen.
This is subject to the conditions that the chosen currency is essential for the company’s business and that accounting and invoicing occurs in the same currency. Existing companies wishing to change to a foreign currency require a resolution of the general meeting with a qualified majority (at least two-thirds of the share votes represented, and a majority of the nominal share values represented).
Cash contributions on company formation, or due to an increase in share capital, can be made in Swiss francs, the currency of the share capital, or in another currency that can be freely converted to the share capital. Capital contributions in cryptocurrencies (such as Bitcoin) will remain only permissible as contributions in-kind, as cash payment is reserved for national currencies. In contrast to cash payment, payment in-kind results in a qualified company formation with additional requirements.
Requirements regarding acquisition of assets to be lifted
Until now, as well as payment in-kind, the intended acquisition of assets was also designated as a qualified company formation. If, during the formation, the company intends or commits to acquire assets from a shareholder, then a formation and audit report must be prepared in addition to the usual formation documentation. The acquisition of assets must also be recorded in the articles of association and entered into the commercial register.
The current provisions on acquisition of assets are intended to prevent the circumvention of the requirements for contributions in-kind. This applies when cash is paid on formation, but the relevant funds are then used for the acquisition of assets of related persons (shareholders). However, certain situations are not covered by this, and legal uncertainties arose with implementation.
The removal of these special provisions will simplify company formation in this respect. The protection given by the lifted provisions is absorbed by the remaining provisions relating to capital maintenance and directors’ duties and liability.
Capital band
The introduction of a capital band enables the capital structure of the business to be adjusted more flexibly to suit changed circumstances. The new law allows capital to be adjusted more easily both upwards (capital increase) and downwards (capital decrease).
The general meeting can authorize the board of directors to adjust the share capital within a fixed band for a maximum of five years. The law stipulates that the higher amount of the capital band must be a maximum of 50% above the existing capital amount, with the lower amount a maximum of 50% below, and it cannot fall below the statutory minimum capital level of CHF 100,000.
The authorization to the board can contain restrictions, requirements and conditions. The general meeting can also allow only capital increases or decreases. However, the board can only be authorized to decrease capital if the company’s annual accounts are reviewed by an auditor at least in a limited audit.
The capital band replaces the previous instrument of approved capital increase and can only be implemented with a qualified majority decision of the general meeting.
Amending articles of association
Articles of association can be amended to reflect the change in law prior to it coming into force. However, it is essential that the relevant changes only take effect from 1 January 2023, which must be explicitly stated in the respective resolution of the general meeting.