{"id":3331,"date":"2026-01-14T15:58:00","date_gmt":"2026-01-14T14:58:00","guid":{"rendered":"https:\/\/www.swisscompany.com\/?p=3331"},"modified":"2026-03-26T16:24:50","modified_gmt":"2026-03-26T15:24:50","slug":"capital-increase-reduction-switzerland","status":"publish","type":"post","link":"https:\/\/www.swisscompany.com\/en\/capital-increase-reduction-switzerland\/","title":{"rendered":"Capital increase or reduction in Switzerland"},"content":{"rendered":"\n

Requirements and Procedures in Switzerland<\/strong><\/p>\n\n\n\n

A Comprehensive Guide for Entrepreneurs, Founders, and Board Members<\/em><\/p>\n\n\n\n

Introduction: Why Capital Changes Are Strategically Important<\/h2>\n\n\n\n

The capital structure of a Swiss corporation (Aktiengesellschaft, or AG<\/a><\/strong>) or a limited liability company (Gesellschaft mit beschr\u00e4nkter Haftung, or GmbH)<\/a><\/strong> is not a static construct. Over the life of a business, equity requirements change \u2013 whether due to growth phases, investment rounds, financial difficulties, or strategic realignments. Swiss corporate law, specifically the Code of Obligations (Obligationenrecht, or OR), provides companies with two key instruments for this purpose: the capital increase<\/strong> (Kapitalerh\u00f6hung) and the capital reduction<\/strong> (Kapitalherabsetzung).<\/p>\n\n\n\n

Both measures are subject to strict legal requirements and demand a precise process to be legally effective. Procedural errors can render resolutions void and expose board members to significant personal liability. This article provides a comprehensive explanation of when each measure is appropriate, what legal prerequisites apply, and how the process works in practice \u2013 taking into account the most recent revision of Swiss corporate law, which came into effect on January 1, 2023.<\/p>\n\n\n\n

Part 1: The Capital Increase<\/h2>\n\n\n\n

What Is a Capital Increase?<\/h3>\n\n\n\n

In a capital increase, the share capital (Aktienkapital) or registered capital (Stammkapital) of a company is raised. This is accomplished by issuing new shares or equity interests in exchange for contributions from existing shareholders or new investors. A capital increase strengthens the company\u2019s equity base and thereby improves its creditworthiness, credit rating, and overall financial stability.<\/p>\n\n\n\n

When Is a Capital Increase Appropriate?<\/h3>\n\n\n\n

Typical reasons for a capital increase include financing growth projects or expansions, admitting new investors or shareholders, restructuring in the case of capital loss or over-indebtedness, converting debt into equity (debt-to-equity swap), and meeting regulatory equity requirements, for example in the financial sector.<\/p>\n\n\n\n

Types of Capital Increases Under Swiss Law<\/h3>\n\n\n\n

Since the 2023 revision, Swiss corporate law distinguishes the following types of capital increases:<\/p>\n\n\n\n

1. Ordinary Capital Increase (Art. 650 CO)<\/h4>\n\n\n\n

The ordinary capital increase is the classic approach. The general meeting of shareholders (Generalversammlung) resolves a one-time, immediate increase of the share capital. The board of directors then implements the resolution within six months. This form is particularly suitable when the capital requirement is clearly defined and the timeframe is foreseeable.<\/p>\n\n\n\n

2. Capital Band (Art. 653s et seq. CO) \u2013 Successor to the Authorized Capital Increase<\/h4>\n\n\n\n

The capital band (Kapitalband) is a new feature introduced by the revised corporate law and replaces the former authorized capital increase (genehmigte Kapitalerh\u00f6hung). The general meeting authorizes the board of directors to adjust the share capital within a defined range \u2013 both upward and downward \u2013 for a maximum period of five years. The upper limit may not exceed one and a half times, and the lower limit must be at least half, of the registered share capital. The capital band offers companies significantly more flexibility and is particularly well-suited for startups and high-growth companies.<\/p>\n\n\n\n

3. Conditional Capital Increase (Art. 653 et seq. CO)<\/h4>\n\n\n\n

In a conditional capital increase, the capital is only increased when certain conditions are met \u2013 typically the exercise of conversion or option rights by employees or investors. This form is frequently used for employee stock ownership plans (ESOPs).<\/p>\n\n\n\n

Requirements for a Capital Increase<\/h3>\n\n\n\n

For a capital increase to be legally effective, the following requirements must be met:<\/p>\n\n\n\n

Requirement<\/strong><\/td>Details<\/strong><\/td><\/tr>
Shareholder Resolution<\/strong><\/td>Qualified majority of at least 2\/3 of votes and absolute majority of par values (Art. 704 CO)<\/td><\/tr>
Terms and Conditions<\/strong><\/td>Par value, issue price, type of contributions (cash or contributions in kind), subscription rights<\/td><\/tr>
Payment (Liberierung)<\/strong><\/td>At least 20% of par value for cash contributions; contributions in kind must be paid in full with an appraisal report<\/td><\/tr>
Notarial Authentication<\/strong><\/td>The capital increase resolution must be notarized (public deed)<\/td><\/tr>
Audit Confirmation<\/strong><\/td>A licensed auditor must review and confirm the capital increase<\/td><\/tr>
Commercial Registry<\/strong><\/td>Registration in the Commercial Register (Handelsregister) is constitutive \u2013 the increase only becomes effective upon registration<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Step-by-Step Process of an Ordinary Capital Increase<\/h3>\n\n\n\n
    \n
  1. Preparation by the Board of Directors: <\/strong>The board prepares a proposal for the general meeting with detailed information on the increase amount, issue price, type of contributions, and treatment of subscription rights.<\/li>\n\n\n\n
  2. Resolution of the General Meeting: <\/strong>The general meeting resolves the capital increase by qualified majority. The articles of association (Statuten) are amended accordingly.<\/li>\n\n\n\n
  3. Subscription and Payment: <\/strong>The new shares are subscribed and contributions are made. For cash contributions, the funds must be deposited into an escrow account (Sperrkonto) at a bank.<\/li>\n\n\n\n
  4. Board Confirmation Resolution: <\/strong>The board of directors confirms that the capital increase has been properly executed and amends the articles of association.<\/li>\n\n\n\n
  5. Audit Confirmation: <\/strong>A licensed auditor reviews the execution and issues a confirmation report.<\/li>\n\n\n\n
  6. Notarization: <\/strong>The board\u2019s confirmation resolution and the amendment to the articles of association are notarized in a public deed.<\/li>\n\n\n\n
  7. Registration in the Commercial Register: <\/strong>The filing is submitted to the competent Commercial Registry office. The capital increase only becomes legally effective upon registration, and the escrow accounts are released.<\/li>\n<\/ol>\n\n\n\n

    Subscription Rights of Existing Shareholders<\/h3>\n\n\n\n

    Existing shareholders are generally entitled to a statutory subscription right<\/strong> (Bezugsrecht) to subscribe for new shares in proportion to their existing holdings (Art. 652b CO). This right protects shareholders against dilution of their interests. However, the subscription right may be withdrawn or restricted by a resolution of the general meeting passed with a qualified majority \u2013 but only for good cause, such as a strategic partnership, an acquisition, or employee participation.<\/p>\n\n\n\n

    Part 2: The Capital Reduction<\/h2>\n\n\n\n

    What Is a Capital Reduction?<\/h3>\n\n\n\n

    In a capital reduction, the share capital or registered capital of the company is decreased. This can be achieved by reducing the par value of existing shares, consolidating shares, or canceling shares (e.g., after a buyback). The capital reduction is a sensitive instrument because it directly affects the creditor-protection function of equity.<\/p>\n\n\n\n

    When Is a Capital Reduction Appropriate?<\/h3>\n\n\n\n

    Common reasons for a capital reduction include restructuring in the case of capital loss, in order to clean up the balance sheet and restore the relationship between share capital and equity. Additional reasons are the repayment of surplus capital to shareholders, adjustment of the capital structure following a reorganization or merger, and tax-driven structural optimization.<\/p>\n\n\n\n

    Types of Capital Reductions<\/h3>\n\n\n\n

    1. Ordinary Capital Reduction (Art. 653j et seq. CO)<\/h4>\n\n\n\n

    In an ordinary capital reduction, the capital is effectively reduced. Because this affects creditors, the law mandates a strict creditor-protection procedure including a public call to creditors (Schuldenruf). Creditors must be publicly invited to register their claims, and the company must satisfy or secure those claims.<\/p>\n\n\n\n

    2. Capital Reduction in the Context of a Reorganization (Art. 653r CO)<\/h4>\n\n\n\n

    In a restructuring scenario, the capital reduction serves to eliminate a balance sheet deficit (Unterbilanz). The reduction amount is used to cover accumulated losses. In this case, the public call to creditors is waived if a capital increase of at least the same amount is carried out simultaneously or immediately afterward. This procedure is known as a \u201cconcertina\u201d (Harmonika)<\/strong> or capital cut (Kapitalschnitt)<\/strong>, and it is one of the most important restructuring tools under Swiss law.<\/p>\n\n\n\n

    3. Reduction via the Capital Band<\/h4>\n\n\n\n

    Since the 2023 corporate law revision, the board of directors may also reduce the capital within the framework of the capital band, provided the general meeting has granted the corresponding authorization. This significantly simplifies the buyback of treasury shares and their subsequent cancellation.<\/p>\n\n\n\n

    Requirements for a Capital Reduction<\/h3>\n\n\n\n
    Requirement<\/strong><\/td>Details<\/strong><\/td><\/tr>
    Shareholder Resolution<\/strong><\/td>Qualified majority (2\/3 of votes + absolute par value majority)<\/td><\/tr>
    Audit Confirmation<\/strong><\/td>A licensed auditor must confirm that creditors\u2019 claims remain fully covered despite the reduction<\/td><\/tr>
    Public Call to Creditors<\/strong><\/td>Three public notices in the Swiss Official Gazette of Commerce (SOGC\/SHAB) inviting creditors to register their claims (minimum period: 30 days)<\/td><\/tr>
    Creditor Satisfaction<\/strong><\/td>Claims registered must be satisfied or secured before execution<\/td><\/tr>
    Minimum Capital<\/strong><\/td>Share capital may not fall below CHF 100,000 (AG) or CHF 20,000 (GmbH)<\/td><\/tr>
    Notarial Authentication<\/strong><\/td>Notarization of the capital reduction resolution in a public deed<\/td><\/tr>
    Commercial Registry<\/strong><\/td>Constitutive registration in the Commercial Register<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    Step-by-Step Process of an Ordinary Capital Reduction<\/h3>\n\n\n\n
      \n
    1. Resolution of the General Meeting: <\/strong>The general meeting resolves the capital reduction by qualified majority and specifies the purpose (e.g., loss elimination, repayment to shareholders).<\/li>\n\n\n\n
    2. Audit Confirmation: <\/strong>A licensed auditor issues a confirmation that creditors\u2019 claims remain fully covered despite the capital reduction.<\/li>\n\n\n\n
    3. Public Call to Creditors (Schuldenruf): <\/strong>The company publishes three notices in the Swiss Official Gazette of Commerce (SOGC\/SHAB) calling on creditors to register their claims. At least 30 days must elapse between the first and the last publication.<\/li>\n\n\n\n
    4. Satisfaction of Claims: <\/strong>The company satisfies or secures all registered claims within a reasonable period.<\/li>\n\n\n\n
    5. Notarization: <\/strong>The board of directors confirms the completion of the procedure and has the resolution notarized in a public deed.<\/li>\n\n\n\n
    6. Registration in the Commercial Register: <\/strong>The capital reduction is filed with and registered by the Commercial Registry office.<\/li>\n<\/ol>\n\n\n\n

      Part 3: Capital Increase vs. Capital Reduction \u2013 A Comparison<\/h2>\n\n\n\n

      The following overview compares the two measures side by side:<\/p>\n\n\n\n

      Criterion<\/strong><\/td>Capital Increase<\/strong><\/td>Capital Reduction<\/strong><\/td><\/tr>
      Purpose<\/strong><\/td>Capital injection, growth<\/td>Capital return, restructuring<\/td><\/tr>
      Shareholder Vote<\/strong><\/td>Qualified majority<\/td>Qualified majority<\/td><\/tr>
      Call to Creditors<\/strong><\/td>Not required<\/td>Required (3x SOGC\/SHAB)<\/td><\/tr>
      Auditor<\/strong><\/td>Audit confirmation<\/td>Audit confirmation<\/td><\/tr>
      Notarization<\/strong><\/td>Required<\/td>Required<\/td><\/tr>
      Registry Filing<\/strong><\/td>Constitutive<\/td>Constitutive<\/td><\/tr>
      Minimum Capital<\/strong><\/td>No maximum limit<\/td>CHF 100,000 (AG) \/ 20,000 (GmbH)<\/td><\/tr>
      Typical Duration<\/strong><\/td>4\u201312 weeks<\/td>3\u20136 months (due to creditor call)<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

      Part 4: Key Changes Under the 2023 Corporate Law Revision<\/h2>\n\n\n\n

      The revision of Swiss corporate law, which came into effect on January 1, 2023, introduced significant changes affecting capital transactions. In addition to the introduction of the capital band as a flexible tool for managing share capital, the revision made it possible to hold general meetings entirely online, thereby simplifying the decision-making process for capital changes.<\/p>\n\n\n\n

      Furthermore, the legislature modernized the provisions governing contributions in kind and their acquisition. The former capital increase report was replaced by the audit confirmation of a licensed auditor. In addition, the threshold for conditional capital was raised from 50 to 100 percent of share capital, giving companies more room for employee participation programs.<\/p>\n\n\n\n

      Part 5: Practical Tips for a Successful Capital Change<\/h2>\n\n\n\n

      Plan Early: <\/strong>Especially for capital reductions, the public call to creditors should be initiated well in advance, as it can extend the process by several months.<\/p>\n\n\n\n

      Engage Professionals: <\/strong>Involve a specialized attorney, a notary, and an audit firm early on. The cost of professional guidance is modest compared to the risks of an improperly executed procedure.<\/p>\n\n\n\n

      Review Tax Implications: <\/strong>Both capital increases and reductions have tax consequences. A capital increase triggers a federal issuance stamp duty (Emissionsabgabe) of 1 percent (with a CHF 1 million exemption). A capital reduction with repayment to shareholders may trigger a 35 percent federal withholding tax (Verrechnungssteuer).<\/p>\n\n\n\n

      Leverage the Capital Band: <\/strong>For companies with recurring capital needs or planned share buyback programs, the new capital band is an efficient tool that significantly reduces administrative burden.<\/p>\n\n\n\n

      Documentation: <\/strong>Maintain thorough documentation of every step. This protects the board of directors against personal liability and facilitates the Commercial Register filing.<\/p>\n\n\n\n

      Conclusion<\/h2>\n\n\n\n

      Capital increases and capital reductions are among the fundamental instruments of corporate finance and restructuring under Swiss law. While the capital increase primarily serves capital procurement and growth, the capital reduction enables a clean-up of the capital structure and the return of surplus capital to shareholders.<\/p>\n\n\n\n

      Both procedures are subject to strict formal requirements and demand careful preparation. The 2023 corporate law revision introduced the capital band as a welcome flexibility tool that expands the board of directors\u2019 scope of action. Companies looking to actively manage their capital structure are well-advised to take full advantage of the various options available under the revised law and to seek professional guidance early in the process.<\/p>\n\n\n\n

      Disclaimer: This article is for general informational purposes only and does not constitute legal advice. For specific questions regarding capital changes, please consult a specialized attorney.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

      Requirements and Procedures in Switzerland A Comprehensive Guide for Entrepreneurs, Founders, and Board Members Introduction: Why Capital Changes Are Strategically Important The capital structure of a [\u2026]<\/span><\/p>\n","protected":false},"author":1,"featured_media":3330,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"class_list":["post-3331","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-unkategorisiert"],"_links":{"self":[{"href":"https:\/\/www.swisscompany.com\/en\/wp-json\/wp\/v2\/posts\/3331","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swisscompany.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swisscompany.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swisscompany.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swisscompany.com\/en\/wp-json\/wp\/v2\/comments?post=3331"}],"version-history":[{"count":0,"href":"https:\/\/www.swisscompany.com\/en\/wp-json\/wp\/v2\/posts\/3331\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.swisscompany.com\/en\/wp-json\/wp\/v2\/media\/3330"}],"wp:attachment":[{"href":"https:\/\/www.swisscompany.com\/en\/wp-json\/wp\/v2\/media?parent=3331"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swisscompany.com\/en\/wp-json\/wp\/v2\/categories?post=3331"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swisscompany.com\/en\/wp-json\/wp\/v2\/tags?post=3331"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}