Articles of incorporation and governing bodies

The law requires that a corporation should have three governing bodies:

The general meeting of shareholders is the highest governing body. It has the most important powers, for instance to adopt and amend articles of incorporation, elect the board of directors and auditors, approve annual business reports and the annual balance sheet and income statement (profit and loss account), decide on the distribution of profit, and approve management.

The board of directors is the corporation's managing body. It consists of one or more members who must also be shareholders. It must contain a majority of Swiss citizens resident in Switzerland. Exceptions to these rules may be permitted in the case of holding companies, but in every case at least one authorised representative of the company must be resident in Switzerland.

The auditors audit the annual accounts with a view to their accuracy and report either to the board of directors or to the general meeting. Fiduciary companies and auditing firms may be elected as auditors. The auditors must be qualified and independent.

Limited liability company

A limited liability company (in German: Gesellschaft mit beschränkter Haftung or GmbH) is a legal entity in which two or more persons or companies come together in a new firm with predetermined nominal capital. Each member takes equity in the company by contributing to its capital; liability of each member is limited to the amount of the registered nominal capital.

Increasing popularity as an alternative to the corporation a limited liability company

A limited liability company is an attractive company structure which is becoming more popular as a legal form for small and medium-sized businesses.

Advantages over the corporation