What is the share capital of a LLC?
The share capital of a LLC is the capital figure of the company specified in the articles of association. It is divided into shares in which the shareholders participate.
The LLC is a corporation with personal elements. In principle, only the company assets are liable for its debts, not the personal assets of the shareholders (Art. 772 Abs. 1 OR). At the same time, the shareholders must participate with at least one share (Art. 772 Abs. 2 OR).
It is important to distinguish between the capital figure and the actual assets of the LLC. The capital figure is stated in the articles of association. The real assets of the company, on the other hand, are constantly changing, for example due to expenses, income, losses or investments. The share capital is therefore not a permanently blocked sum of money, but a legal minimum basis of the company, which also serves to protect creditors.
How high must the share capital be at least?
For a Swiss LLC, the statutory minimum capital is CHF 20'000 (Art. 773 Abs. 1 OR). This amount applies at the time of formation and during the entire duration of the company. A reduction below CHF 20'000 is only permitted if it is increased again to at least this amount at the same time (Art. 782 Abs. 2 OR).
Since the revision of the company law, share capital in a foreign currency essential to the business activity is also possible. The rules of company law regarding capital in foreign currency apply mutatis mutandis (Art. 773 Abs. 2 OR). This is of practical relevance primarily for companies that keep their bookkeeping and financial reporting in an approved foreign currency.
For most founders, however, the normal case remains clear: the LLC is founded with CHF 20'000. A higher amount is possible, but not mandatory. Whether this makes sense depends on the planned activity, the initial investments and the financial requirements.
Must the share capital be fully paid in?
Yes. In the case of a LLC, each share must be fully paid up upon formation. This means that the contribution in the amount of the issue price must be paid in full (Art. 777c Abs. 1 OR).
A partial payment as in the stock corporation does not exist in the LLC. Anyone who founds a LLC with CHF 20'000 must therefore contribute this amount in full. Any premium, i.e. an issue premium above the nominal value, must also be paid in full.
The founders state in the deed of incorporation that all shares have been validly subscribed for and that the contributions correspond to the total issue price (Art. 777 Abs. 2 OR). The public deed also contains details on the subscription of shares and on the contributions (Art. 72 HRegV).
How does the payment work in practice?
In the case of a cash formation, the money is usually transferred to a capital contribution account at a bank. The account is held in the name of the company to be formed. The bank confirms the payment so that the formation can be registered with the commercial register.
The LLC only comes into legal existence upon registration in the commercial register (Art. 779 Abs. 1 OR). From this moment on, it receives its own legal personality. Afterwards, the paid-in money is transferred in practice to a business account of the company.
Among other things, the amount and currency of the share capital as well as the shareholders with the number and nominal value of their shares appear in the commercial register (Art. 73 Abs. 1 lit. h HRegV, Art. 73 Abs. 1 lit. i HRegV). This creates transparency about who is involved in the LLC.
If you need support with the formation process, Jurata will be happy to help you at any time: GmbH-Gründung einfach online erledigen.
Can assets be contributed instead of money?
Yes. A LLC can also be founded with contributions in kind. Typical examples are machinery, vehicles, inventory, intellectual property rights or other assets, provided they meet the statutory requirements.
For contributions in kind, the rules of company law apply accordingly via the reference in LLC law (Art. 777c Abs. 2 OR). An object can only serve as a contribution in kind if it can be recognized in the balance sheet, can be transferred to the company, is freely disposable after registration and can be realized by transfer to third parties (Art. 634 Abs. 1 OR).
This is an important point. Not every useful object is suitable as a contribution in kind. Know-how, mere labor or a non-binding business idea are generally not sufficient as capital coverage. The company needs an asset that is economically tangible and transferable.
The contribution in kind must be agreed in writing. If the transfer of the object requires a public deed, the contract of contribution in kind must also be publicly certified (Art. 634 Abs. 2 OR). In addition, the articles of association must state the object, its valuation, the name of the contributor and the shares issued in return (Art. 634 Abs. 4 OR).
May the LLC use the money after the formation?
Yes. After registration, the contributed capital belongs to the LLC. The company may use it for its business purpose, such as for rent, salaries, goods, marketing, software, machinery or consulting.
However, returning the contributions to the shareholders is impermissible. The law explicitly states that contributions may not be returned (Art. 793 Abs. 2 OR). This prohibition protects creditors and prevents the LLC from appearing to be capitalized outwardly while this capital actually ends up back with the shareholders.
Permitted are therefore real business expenses. Problematic, on the other hand, are payments without a business reason, private expenses via the business account, interest-free or non-valuable loans to shareholders, or a hidden payout to the founders. Such processes can be legally treated as an impermissible return of contribution.
What is the difference between permitted use and prohibited return of contribution?
The decisive factor is whether the expenditure serves the LLC or whether it economically benefits the shareholders without the company receiving an adequate consideration.
Situation | Assessment |
|---|---|
Purchase of a laptop for the activity of the LLC | Usually permitted |
Payment of the office rent of the LLC | Usually permitted |
Salary payment for real work in an appropriate amount | Usually permitted |
Transfer to the private account without legal grounds | Impermissible |
Private holiday via the business account | Impermissible |
Loan to shareholders without repayment capacity or collateral | Delicate to impermissible |
The LLC is therefore allowed to use its assets. However, it must not return them to the shareholders without a clean legal basis. Outside of a liquidation, a return of contributions is in principle only possible via a formal capital reduction procedure (Art. 782 OR, Art. 793 Abs. 2 OR).
Do the CHF 20'000 always have to remain in the account?
No. This misconception is widespread. The share capital must be fully contributed upon formation. Thereafter, the LLC may use it for business purposes.
However, this does not mean that capital protection is meaningless. If the company makes losses or assets flow to shareholders without legal grounds, legal problems can arise. The management must therefore keep clean accounting records and ensure that private and business expenses remain strictly separated.
The practical rule is: the money does not have to lie idle, but every use must serve the company and be traceable in the accounting.
Can the share capital be increased or reduced later?
Yes. The shareholders' meeting can increase the share capital (Art. 781 Abs. 1 OR). The increase must be registered with the commercial register within six months, otherwise the resolution becomes void (Art. 781 Abs. 4 OR). For the subscription and the contributions, the formation regulations basically apply again (Art. 781 Abs. 3 OR).
A reduction is also possible. In this case, however, the share capital must not fall below CHF 20'000, unless it is increased again to at least this amount at the same time (Art. 782 Abs. 2 OR). For founders, it is therefore usually more important to plan realistically from the very beginning: CHF 20'000 is the legal minimum, but not necessarily the economically correct start-up financing.
Frequently asked questions about the share capital of a LLC
Can I found a LLC with less than CHF 20'000?
No. The statutory minimum capital is CHF 20'000 (Art. 773 Abs. 1 OR). If you have less equity available, another legal form may come into consideration.
Does the paid-in money belong to me or to the LLC after formation?
It belongs to the LLC. After registration, the LLC is its own legal entity (Art. 779 Abs. 1 OR). The money must therefore not simply be withdrawn privately.
Can I use the share capital for my first salary?
In principle, yes, if you actually work for the LLC and the salary is appropriate. However, a salary payment must not merely serve to return the contribution to you in a hidden manner.
What happens if contributions are impermissibly returned?
An impermissible return of contribution can have legal consequences and lead to the obligation to make a contribution being revived. For founders, a clean separation of private and business assets is therefore central (Art. 793 Abs. 2 OR).
