GmbH (Gesellschaft mit beschränkter Haftung): Definition

Definition

The GmbH (Gesellschaft mit beschränkter Haftung) is the Swiss limited liability company, governed by Articles 772–827 of the Swiss Code of Obligations (OR). It is the most popular corporate form for small and medium-sized enterprises (SMEs) in Switzerland, combining limited liability with a simpler governance structure and lower capital requirements than the AG. The GmbH has separate legal personality, and members’ liability is limited to their capital contributions.

Key Characteristics

Capital Structure

The GmbH’s capital is divided into quotas (Stammanteile), each with a minimum nominal value of CHF 100. Unlike AG shares:

• Quotas are registered — each member’s name, domicile and quota value are recorded in the commercial register
• This means GmbH membership is public information, unlike AG shareholdings
• Quotas may carry different nominal values (e.g., one member holds a CHF 15,000 quota, another holds a CHF 5,000 quota)
• The articles of association may provide for quotas with different voting rights or profit-sharing ratios

Capital Must Be Fully Paid In

Unlike the AG (where only 20% or CHF 50,000 minimum must be paid in at formation), the full CHF 20,000 GmbH share capital must be deposited and paid in at formation. This simplifies the capital structure but requires the full amount upfront.

Governance

Members’ Meeting (Gesellschafterversammlung)

The members’ meeting is the supreme governing body, with authority over:

• Amendment of the articles of association
• Appointment and removal of managers
• Approval of annual financial statements and profit distribution
• Capital increases and decreases
• Approval of quota transfers (unless the articles provide otherwise)

Management (Geschäftsführung)

By default, all members are entitled and obligated to manage the company jointly. In practice, the articles of association typically:

• Delegate management to one or more designated managers (who may or may not be members)
• Appoint a chairperson of management
• Define signatory authority (registered in the commercial register)

Duty of Loyalty and Non-Competition

GmbH members owe a duty of loyalty to the company (Art. 803 OR). Members who are also managers are subject to a statutory non-competition obligation unless the articles provide otherwise or the other members consent.

Transfer of Quotas

Quota transfers are more restricted than AG share transfers:

1. Members’ approval required: The transfer of quotas requires the approval of the members’ meeting (by at least two-thirds of votes represented and an absolute majority of capital), unless the articles of association provide otherwise
2. Notarial form: The transfer agreement must be in notarial form (Art. 785 OR)
3. Commercial register update: The new member must be registered in the commercial register
4. Pre-emption rights: The articles may grant existing members pre-emption rights

This restricted transferability is a key distinction from the AG, where shares can generally be transferred freely. It makes the GmbH less suitable for companies planning frequent ownership changes or external investment rounds.

Formation Process

1. Draft the articles of association (Statuten)
2. Open a capital deposit account and deposit the full CHF 20,000
3. Execute the deed of incorporation before a notary
4. Register with the commercial register
5. Register for AHV, VAT and cantonal taxes
6. Appoint an auditor (unless opting out under Swiss audit requirements)

Timeline: Typically 2–4 weeks from notarisation to commercial register entry.

Cost: Formation costs are approximately CHF 2,000–5,000, including notary fees, commercial register fees and basic legal advice. No stamp duty applies on GmbH capital below CHF 1 million.

Advantages of the GmbH

• Lower capital requirement: CHF 20,000 vs. CHF 100,000 for an AG
• Simpler governance: No formal board of directors required; management structure is flexible
• Lower formation cost: Fewer formalities and lower professional fees
• Suitable for owner-managed businesses: The default joint management model works well for small teams
• Limited liability: Same protection as the AG — members are not personally liable for company debts

Limitations of the GmbH

• Public membership: Members’ names and quotas are visible in the commercial register — no anonymity
• Restricted quota transfer: Notarial form and member approval create friction for ownership changes
• Limited equity instruments: No equivalent of participation certificates, preference shares or equity compensation conditional capital (possible but structurally less flexible than the AG)
• Perception: Some international counterparts, investors and banks perceive the GmbH as a “smaller” entity; the AG carries more prestige in certain contexts

When to Choose a GmbH

The GmbH is the right choice when:

• Capital requirements are modest (CHF 20,000 is sufficient)
• The business is owner-managed with a small, stable group of members
• External investment rounds are not anticipated in the near term
• Simplicity of governance is valued over structural flexibility
• Operating costs must be minimised during the early stages
• The business operates primarily in the domestic Swiss market

For businesses that may grow into needing external capital, equity compensation plans or an eventual listing, starting as a GmbH and converting to an AG later is a common and straightforward path. The conversion requires a notarised resolution and commercial register filing but does not trigger adverse tax consequences if properly structured.

Donovan Vanderbilt is a contributing editor at ZUG BUSINESS, the institutional intelligence publication of The Vanderbilt Portfolio AG, Zurich. His coverage spans Swiss corporate law, company formation and SME governance.