Private
(Partnerships) and public companies (corporations) compared
When
a company is being founded, the first question is whether the partners’
interests or those of the equity-holders are the most important aspect.
Advantages
of a partnership over a public company:
-
Nationality requirements in respect of partners are less demanding,
since only one managing partner must be resident in Switzerland.
-
The establishment procedure is simpler and cheaper, there are fewer
formal requirements and partners can themselves act as the governing
bodies.
-
It is possible to avoid double taxation of the partnership’s
profit in Switzerland: tax is paid twice in the case of corporations
(joint stock companies), once by the shareholder and once by the firm.
-
Partnerships are appropriate for smaller businesses for whom managerial
independence and the relationship between partners is important.
- Disadvantages
of a partnership against a public company:
-
The partners’ liability is unlimited, and it is harder to transfer
shares in the ownership of the partnership.
-
The partners must be named in the commercial register (thus losing
anonymity).
-
Access to capital markets is more difficult.
-
Public companies or corporations suit capital-intensive businesses
where the shareholders' investment plays an important role and their
liability needs to be limited.
Subsidiary
and branch compared
A
foreign parent company has to decide whether to set up its Swiss offshoot
as a subsidiary or as a branch.
Advantages
of a branch as against a legally independent subsidiary:
-
No separate equity is required; it is sufficient that capital resources
provided by the parent company are made available; no particular amount
is specified.
-
It is easier and cheaper to establish a branch than to set up a public
company, there is neither stamp duty nor withholding tax on the transfer
of profits (see «Taxes»).
-
The branch is appropriate for businesses where the foreign parentcompany
wishes to maintain its direct influence.
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