What is Registered capital?

Registered capital refers to the amount of money that a company is legally required to have as part of its formation process, which is registered in its Articles of Incorporation and reflected in its official records. This capital is intended to serve as the financial foundation for the business and provides a cushion for creditors in case the company faces financial difficulties. In Switzerland, the amount of registered capital required varies depending on the type of company being formed.

Key Features of Registered Capital in Switzerland

  1. Minimum Capital Requirements
    • For a Limited Liability Company (GmbH), the minimum registered capital is CHF 20,000, and it must be fully paid up before registration.
    • For a Corporation (AG), the minimum registered capital is CHF 100,000, with at least CHF 50,000 required to be paid up during incorporation.
    • Sole proprietorships and partnerships do not have a minimum registered capital requirement.
  2. Purpose of Registered Capital
    • Registered capital serves as the financial base of the company, providing initial funding for operations and business activities.
    • It offers protection to creditors by ensuring that the company has enough capital to meet its initial obligations.
  3. Payment and Contribution
    • The registered capital can be contributed in cash, or in some cases, as non-cash assets (such as property or intellectual property), subject to the approval of the company’s auditor.
    • For AG (corporations), the capital must be deposited in a Swiss bank account before the company is officially registered.
  4. Impact on Company Structure
    • The amount of registered capital also affects the company’s structure and its ability to raise funds. Higher capital can signal financial stability to investors, partners, and clients.

Importance of Registered Capital

  • Legal Requirement: Registered capital is a legal requirement for the incorporation of certain types of companies in Switzerland and must be declared during registration with the Swiss Commercial Register.
  • Credibility and Trust: A sufficient amount of registered capital enhances the credibility of the company with investors, creditors, and business partners.
  • Financial Security: It provides a financial buffer to help the company cover initial operational costs and liabilities, offering protection in case of insolvency.

In Switzerland, registered capital is an essential part of the company formation process, ensuring that businesses have a solid financial foundation while meeting legal requirements.