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Typical Businesses in Switzerland
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In Switzerland, the following main forms of businesses are available:
- · Corporation: A company with a predetermined capital that is divided into bearer or registered shares. The shareholders' liability is limited to the nominal capital invested in the corporation.
- · Limited Liability Company: A company with a limited capital divided into quotas. The quotaholders' liability is limited to the company's registered capital.
- · General Partnership: A partnership of two or more individuals in which the partners have unlimited liability and are generally bound by the acts of the other partners.
- · Simple Partnership: A contractual relationship between two or more persons (individuals or corporations), mainly for the realization of a particular project. This type of relationship has characteristics similar to a general partnership but, in particular, its name is not protected by law.
- · Cooperative: A union of at least seven persons, without upper limit, which is organized as an entity. Used mainly by agricultural and large retail organizations.
Instead of incorporating a company in Switzerland a business can be operated through a branch of a foreign company. Further, it should be noted that the legal form of a "trust" as known in common law does not exist in Swiss (civil) law.
Preferred Form of Legal Entity
The vast majority of the forms of business in Switzerland are organized as corporations. While historically, the limited liability company did not play an important role in Switzerland, this type of entity became more important in recent years.
Incorporating vs. Establishing a Branch Office
It may be advantageous to establish a branch office instead of a subsidiary if the Swiss business operations are only of marginal significance, or if the foreign company does not wish to fully capitalize its Swiss business operations. The credit standing of the Swiss branch office directly depends on the capitalization of the foreign company. Accordingly, branch offices may be established with a very thin capital base, or with only a minimum organization.
On the other hand, it may be advantageous to establish a company in Switzerland if the business operations are conducted on a larger scale. Also, a Swiss company is advantageous as compared to a branch office if the Swiss business operation should be completely separated from the foreign operations, so that a certain insulation of liability is possible. If a foreign company establishes a subsidiary in Switzerland, dealings between the foreign company and the Swiss subsidiary must be effected at arms' length, however.
Banking in Switzerland for off shore companies are vetted by banking institutions, and in some cases offshore companies are not allowed to open accounts from certain countries or require special structures or relationships before some banking institutions will allow an account to be opened. Cash and other deposits in certain instiances require bank compliance clearence before they are accepted and if not properly cleared can cause difficulties with the client banking relationship and perhaps create a blocking of available funds.
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