Do you want to convert your LLC into a stock corporation? This is how you make the right decision

Introduction

The conversion of an LLC into a stock corporation represents a strategic milestone for growing companies. This decision significantly shapes the future of the company - as a stock corporation offers expanded opportunities for business expansion and often enjoys greater market recognition than an LLC.

This guide highlights:

• Benefits of a stock corporation (AG) for companies and investors

• Legal requirements of the conversion

• Concrete procedural steps

• Capital requirements

• Costs and time expenditure

You will gain practical insights for making an informed decision about converting your LLC into a stock corporation or founding a new company.

Benefits of a stock corporation (AG) for companies and investors

The stock corporation offers significant strategic advantages for growth-oriented companies:

Flexible capital raising

The issuance of new shares allows companies to raise capital flexibly for investments. Access to capital markets and potential stock market launches expand financial leeway for strategic growth.

The structure of a stock corporation allows the building of a broad investor base as shares are generally easy to transfer and thus financial success of the company can be easily participated in.

Enhanced market position

As a stock corporation, a company generally enjoys significantly higher reputation with business partners and potential customers. Depending on the industry, the stock corporation may benefit in negotiations from its strong market position and professional image, positively affecting contract design and project acquisition.

Attractive employee retention

Employee shares and performance-based stock option plans promote employee motivation through direct profit sharing. Employees identify more strongly with the company and benefit from price increases and dividends, which particularly binds skilled and management staff long-term.

Transferability of shares

The anonymous transferability of shares significantly simplifies the trading of company shares. Unlike an LLC, share transfers do not have to be registered in the commercial register but can be directly executed over the stock exchange or over-the-counter by transfer. This allows a quick and uncomplicated change in ownership structure without elaborate administrative processes.

Legal framework of the conversion

The Swiss Merger Act (FusG) forms the central legal basis for the conversion of an LLC into a stock corporation. This law allows a direct conversion without dissolution or re-establishment of the company.

The most important legal prerequisites:

• Compliance with the minimum capital requirements of the stock corporation (CHF 100,000), whereby a partial liberation of at least CHF 50,000 is generally possible

• Retention of existing assets and liabilities

• Preservation of the rights of existing shareholders

The conversion only becomes legally effective with registration in the commercial register. The FusG ensures that all legal relationships of the LLC are seamlessly transferred to the new stock corporation.

Capital requirements before the conversion

The conversion of an LLC into a stock corporation generally requires a increase in the company's capital. The legally required minimum capital for a stock corporation is CHF 100,000, of which at least CHF 50,000 must be paid in.

For LLCs with capital below CHF 100,000, this means:

• Implementation of a capital increase to the minimum amount

• Ensuring the payment of CHF 50,000

• Verification of capital coverage by an approved auditor

Important: If this capital requirement is not yet fulfilled, a capital increase is necessary for the conversion.

The capital requirements serve creditor protection and strengthen the company's financial base. Early planning of the capital increase is crucial for a smooth conversion process. The payment can be made through cash or contributions in kind.

Procedural steps for the conversion

The conversion of an LLC into a stock corporation occurs in clearly defined steps:

Creation of a conversion balance sheet

• Clean, accounting representation of the assets and liabilities of the LLC

• The balance sheet must not be older than 6 months

Creation of all conversion documents

• Commercial register application

• Conversion plan

• Incorporation report

• New statutes for the stock corporation

Shareholders' meeting

• Resolution on the conversion

• Approval of the new statutes

• Election of the board of directors

Notarial certification

• Public certification of the conversion resolution

• Verification of legality by the notary

• Preparation of the commercial register application

Commercial register entry

• Submission of all required documents

• Examination by the commercial register office

• Legal effectiveness of the conversion with registration

  
  

Cost and time expenditure of the conversion

The conversion of an LLC into a stock corporation requires careful budget planning. The total costs typically amount to CHF 4,000 to CHF 5,000 and consist of the following positions:

• Auditor fees for the preparation of the audit report

• Notary fees for certification

• Commercial register fees

• Consultation costs for legal and tax aspects

• Costs for drafting the necessary documents

The time required for the complete conversion is on average 1 to 3 months. The following factors can influence the duration:

• Complexity of the company structure

• Completeness of the submitted documents

• Processing time of the involved authorities

Conclusion

The conversion of an LLC into a stock corporation is a complex process requiring careful planning and professional support. The advantages of a stock corporation, such as better access to capital, increased reputation, and more flexible share transfer, must be weighed against the higher requirements for organization, administration, and capitalization.

The successful execution of the conversion largely depends on good preparation and professional guidance by experienced advisors. Companies should be aware of this challenge and allocate the necessary resources both in terms of time and finances. Jurata supports you in this process with long-standing expertise and a proven network of experts.