Legal Framework, Process, Costs, and Tax Implications – A Comprehensive Guide
Introduction: Why Convert a GmbH into an AG?
The limited liability company (GmbH, Gesellschaft mit beschränkter Haftung) is one of the most popular legal forms for new businesses in Switzerland. However, as a company grows, its organizational needs evolve as well. At the latest when external investors need to be brought on board, employee participation programs are to be introduced, or capital market access needs to be facilitated, the question arises: Is the corporation (AG, Aktiengesellschaft) the better legal form?
The good news is that Switzerland’s Merger Act (Fusionsgesetz, FusG) allows for a straightforward conversion of the legal form – without any liquidation or re-incorporation. Existing contracts, business relationships, and assets remain fully intact. In this comprehensive guide, you will learn everything you need to know about converting a GmbH into an AG in Switzerland: from the legal framework and the step-by-step process to tax implications and common pitfalls.
Reasons for Converting a GmbH into an AG
Easier Capital Raising and Investor Acquisition
The AG offers significant advantages over the GmbH when it comes to raising debt and equity capital. Shares are much easier to transfer than GmbH equity interests, since an AG does not require a notarized transfer agreement. For venture capital firms and institutional investors, the AG is therefore the preferred legal form. The ability to issue different classes of shares – such as common and preferred shares – also allows for flexible structuring of ownership interests.
Shareholder Anonymity
A key difference compared to the GmbH lies in the transparency of ownership structures. While all members of a GmbH are registered by name and equity stake in the commercial register, the AG offers greater privacy. Registered shares must be recorded in the share register, but this register is not publicly accessible. Although bearer shares have no longer been anonymous since 2019, the shareholder structure of an AG remains less transparent than that of a GmbH.
Professional Image and Market Attractiveness
In the business world, the AG traditionally enjoys a higher reputation than the GmbH. This is especially true in an international context, where the corporate form of a stock corporation is globally recognized. For companies that work with international partners or plan a stock exchange listing, the AG can represent a clear competitive advantage.
Employee Participation Programs
Share-based compensation models such as employee stock option plans (ESOPs) are far easier to implement with an AG than with a GmbH. The flexible transferability of shares makes the AG the ideal legal form for growth-oriented companies seeking to attract and retain qualified professionals through attractive participation models.
Legal Framework: The Swiss Merger Act (FusG)
The conversion of a GmbH into an AG is governed by the Federal Act on Merger, Demerger, Transformation and Transfer of Assets (Merger Act, FusG). The key provisions are found in Articles 53 through 68 of the FusG. The law defines a conversion as a change in legal form in which the existing legal entity continues to exist while preserving all property and membership rights.
The following statutory provisions are particularly relevant: Art. 54 FusG governs the permissible types of conversions and confirms that a corporation may be converted into another type of corporation. Art. 57 FusG requires that the incorporation rules of the target legal form be complied with. Art. 61 FusG regulates the preparation of the conversion plan and the conversion report. Art. 63 FusG mandates an audit by a licensed auditor. Art. 65 FusG requires notarial authentication of the conversion resolution.
A fundamental principle of the Merger Act is the preservation of identity: there is no transfer of assets and liabilities to a new legal entity. Instead, only the legal “shell” of the company changes, while all rights and obligations pass seamlessly to the new legal form by operation of law.
Prerequisites for the Conversion
Minimum Share Capital of the AG
The most important prerequisite concerns the share capital. While a GmbH requires a minimum registered capital of CHF 20,000, the minimum share capital of an AG is CHF 100,000, of which at least CHF 50,000 must be paid in. In most cases, a capital increase is therefore necessary before the actual conversion can take place.
Options for the Capital Increase
The capital increase can be carried out in several ways: through a cash contribution by existing or new shareholders into a blocked bank account, through a contribution in kind (transfer of assets such as machinery or real estate), or through the conversion of freely available equity reserves (such as retained earnings) into registered capital. In the case of a contribution in kind, an audit by a licensed auditor is required to confirm the value of the contributed assets.
Capital Coverage
The company’s capital must be fully covered at the time of the conversion. This means that the net assets of the company – i.e., total assets minus liabilities – must at least equal the amount of the company’s capital under the original legal form. The conversion balance sheet may not be more than six months old, calculated from the date the conversion plan is prepared.
GmbH vs. AG: Key Differences at a Glance
| Feature | GmbH | AG |
| Minimum Capital | CHF 20,000 | CHF 100,000 |
| Capital Payment | 100% at incorporation | Min. 50% (CHF 50,000) |
| Share Transfer | Notarial authentication | Simple transfer |
| Ownership Transparency | Visible in commercial register | Not publicly accessible |
| Corporate Bodies | Management | Board of Directors + Mgmt. |
| Stock Exchange Listing | Not possible | Possible |
Step-by-Step Guide: The Conversion Process
Step 1: Preparation and Capital Increase
First, it must be determined whether the existing registered capital meets the requirements of an AG. If a capital increase is necessary, it is carried out before the actual conversion. The capital increase requires a notarially authenticated resolution by the shareholders’ meeting as well as a deposit into a blocked bank account or the contribution of assets in kind. Important: The capital increase must not appear in the conversion balance sheet; it must be completed beforehand.
Step 2: Preparation of the Conversion Plan
The conversion plan is the central document of the entire process. It must be prepared in writing and include the following details: the company name, registered office, and legal form before and after the conversion; the new articles of association of the AG; the allocation of shares to the existing shareholders; and information on whether the company has an auditor. The details of the company prior to the conversion must exactly match the entry in the commercial register.
Step 3: Preparation of the Conversion Report
In addition to the conversion plan, a conversion report must be prepared. This report explains the purpose and effects of the conversion from a legal and economic perspective. It serves to provide the shareholders with an informed basis for their decision. The report must include information on the consequences of the conversion for the shareholders, particularly with respect to their membership rights.
Step 4: Conversion Balance Sheet and Incorporation Report
The conversion requires a current balance sheet that is no more than six months old. If the last balance sheet date was further in the past, or if significant changes in the company’s financial position have occurred since the last annual financial statements, an interim financial statement must be prepared. Additionally, an incorporation report in accordance with Art. 635 CO (Swiss Code of Obligations) must be drafted, confirming compliance with the incorporation requirements of the AG.
Step 5: Audit by a Licensed Auditor
The conversion plan, the conversion report, and the conversion balance sheet must be reviewed by a licensed auditor. Among other things, the auditor confirms that the company’s capital is fully covered and that all statutory requirements have been met. In addition, an audit confirmation in accordance with Art. 635a CO is required.
Step 6: Inspection Period and Shareholder Resolution
Once all documents have been finalized, they are made available to the shareholders for inspection. Subsequently, the shareholders’ meeting passes the conversion resolution. This resolution must be notarially authenticated, meaning a notary must record the resolution and confirm compliance with all formal requirements.
Step 7: Registration with the Commercial Register
Following the notarial authentication, the conversion is filed with the competent commercial register office. All required documents are submitted: the conversion plan, conversion report, conversion balance sheet, audit reports, notarial deed, new articles of association, proof of the capital increase, and additional supporting documents. The dossier typically comprises approximately 30 pages. The conversion becomes legally effective upon entry in the commercial register and is published in the Swiss Official Gazette of Commerce (SOGC).
The Simplified Procedure for SMEs
The Merger Act provides a simplified conversion procedure for small and medium-sized enterprises (SMEs). This procedure applies if the company has not exceeded certain thresholds during the last two fiscal years: total assets of CHF 20 million, revenue of CHF 40 million, and an average of 250 full-time equivalent employees. If two of these three criteria are met, the audit by a licensed auditor and the preparation of the conversion report may be waived, provided all shareholders consent. This significantly reduces both the time and cost involved in the conversion.
Tax Implications of the Conversion
Tax Neutrality
In principle, the conversion of a GmbH into an AG is tax-neutral, provided that so-called tax subject identity is maintained. This means: since both the GmbH and the AG are subject to corporate income and capital taxes as legal entities, a mere change in legal form does not alter the tax treatment. No liquidation taxes or transfer taxes are triggered.
Issuance Stamp Duty
A federal issuance stamp duty is levied on the capital increase. This duty amounts to 1% on the amount exceeding the tax-exempt threshold of CHF 1 million. In the case of an increase in registered capital from CHF 20,000 to CHF 100,000, no issuance stamp duty is typically owed, as the exempt threshold is not exceeded.
Commercial Register Fees and Notary Costs
In addition to tax considerations, the conversion involves fees for the commercial register, notary costs for the notarial authentication, and fees for the licensed auditor. Total costs vary depending on the canton and the complexity of the case, but typically range from CHF 5,000 to CHF 15,000. In more complex cases involving contributions in kind or extensive advisory services, costs may be higher.
Timeline and Costs
The entire conversion process typically takes three to five weeks, provided all documents are submitted completely and correctly. The biggest time factors are the preparation and review of the documents, scheduling with the notary and the auditor, and the processing time of the commercial register office.
Companies should also keep in mind that the capital increase must be completed before the conversion and constitutes a separate procedure. In the case of a cash contribution, a blocked bank account is required, and opening one may take several days depending on the bank. It is therefore advisable to plan for an overall timeline of six to eight weeks to allow sufficient buffer for unforeseen delays.
Common Mistakes and Pitfalls
Incomplete Documentation
One of the most common mistakes is submitting incomplete documents to the commercial register office. Make sure that all documents meet the formal requirements and are submitted as originals. For digital submissions, documents must be in PDF/A format and bear a qualified electronic signature.
Insufficient Capital Coverage
If the company’s net assets are not sufficient to cover the capital, the commercial register office will refuse registration. Have the conversion balance sheet prepared and reviewed in good time to avoid unpleasant surprises.
Neglecting the Appointment of Corporate Bodies
When converting into an AG, a board of directors must be appointed, since the GmbH only has management as a corporate body. The authorized signatories and the type of their signatures (sole signature, joint signature by two) must be determined and registered with the commercial register office.
What Happens After the Conversion?
Once the conversion is entered in the commercial register, it becomes legally effective. From that point on, your company is governed by the provisions of Swiss corporate law (Art. 620 et seq. CO). All existing contracts, employment relationships, and business relationships remain unchanged. However, it is advisable to inform business partners, banks, and insurance companies about the change in legal form.
In addition, letterheads, invoice templates, the company website, and other business documents must be updated to reflect the new company name and legal form. Bank account details should also be updated promptly to avoid any confusion.
Conclusion: Is the Conversion Worth It?
Converting a GmbH into an AG is a strategically important step that offers significant advantages, particularly for growth-oriented companies, startups seeking financing, and firms with an international focus. Thanks to the Swiss Merger Act, the process is clearly regulated and can be carried out without liquidation – a decisive advantage compared to many other jurisdictions.
The benefits of the AG – easier capital transfers, shareholder anonymity, a more professional image, and flexible participation models – outweigh the associated costs and administrative effort in many cases. The key to a successful conversion is careful planning, the timely involvement of specialists such as notaries, auditors, and tax advisors, as well as thorough documentation of all required materials.
Tip: Engage a specialized attorney or fiduciary with experience in conversions under the Merger Act. The investment in professional advice typically pays for itself quickly through a smooth process and the avoidance of costly mistakes.
Disclaimer: This article is for general informational purposes only and does not constitute legal advice. For the specific implementation of a conversion, we recommend consulting qualified professionals.
