Starting a business in Switzerland as a foreigner: Your essential guide

Generally, anyone can start a business, except for those on Switzerland's sanction lists. The only important requirement for every Swiss company is the following:

Every Swiss company is required to have at least one representative with a Swiss residence permit, living in Switzerland.

Now, what does that mean exactly?

This means that if you are planning to start an GmbH (LLC) or AG (LTD) in Switzerland and are not currently residing in Switzerland yourself, you need to find someone with a valid Swiss permit who does. This person needs to represent your company by either being a member of your board of directors, or an authorized signatory.

Both, the director, and the authorized signatory need to be publicly listed in your company’s commercial registry excerpt, including their authority to represent (sign for) your company.

Director vs. Signatory of Swiss corporations

Now, let’s take a look at the differences between a directorship and an authorized signatory.

The main difference lies in their level of responsibility for your company, which the director and signatory become part of in this process. 

While in both cases they are not required to hold shares of the GmbH (LLC) or AG (LTD), the director has to maintain much closer oversight of the business’ operations, make sure the bookkeeping obligations are met, and taxes are paid. To fulfil this, the director generally requires access to the company’s e-banking and accounting software.

The authorized signatory on the other hand, has much less responsibilities and therefore carries much less liability in his/her role. However, an authorized signatory of a company, needs to fill a critical function within the company, i.e. be the CEO or another chief executive, to qualify as an authorized signatory for your company. Yet, it is worth mentioning, that this rule regarding the role of a signatory within a company, seems to be handled somewhat flexibly, potentially due to its vague definition.

Responsibilities and duties of directors in Swiss corporations

The primary role of the director is to supervise and shape the company's strategic direction. Here is a summary of their specific duties, according to Article 716 OR:

• Oversight and Directives: The director serves as the top supervisory and policymaking body of the corporation. They provide necessary directives for the management of the company.
• Organizational Structure: They are responsible for determining the organization of the company.
• Financial Oversight: The director is accountable for setting up accounting systems, financial controls, and financial planning.
• Appointments and Dismissals: They have the authority to appoint and dismiss the management and other authorized representatives of the company.
• Monitoring Compliance: The director must supervise the management to ensure compliance with laws, statutes, regulations, and directives.
• Reporting and Meetings: They are responsible for preparing the annual report, organizing the general assembly, and implementing its resolutions.
• Insolvency Proceedings: In case of insolvency or indebtedness, the director must notify the judge.
• Compensation Report: If the company's shares are listed on a stock exchange, the director must prepare a compensation report.
• Liability for Misconduct: According to Article 754 of the Code of Obligations, the director is liable for any negligent breaches of duty that cause damage to the company, its shareholders, or creditors.

A common example of a director’s breach of duty is the failure to notify the judge in cases of insolvency. Directors can be held liable for the full amount of the damage. Any foreigner looking to incorporate in Switzerland, should therefore be well informed about Swiss business regulations and make sure to find the right person to join the company’s board of directors, if needed.

Who is an ideal director or signatory for my Swiss company?

The ideal person representing your company within Switzerland, and thereby allowing you to ‘set up shop’ in the tax paradise, until you will likely move here and take up that role yourself, is either a personal friend, or close relative that you trust and who trusts you, or a Swiss law attorney or notary. 

Many lawyers and notaries will therefore offer to take up these positions, earning them an additional income, while being most capable to manage their risk, knowing the Swiss Organizational Law (OR) best.

When connecting with a potential director or signatory for your company, we recommend you to not only let them do their due diligence on you, but also thoroughly check that they are the right person for this role for your company and that no uncertainties in their level of involvement and your ways of collaborating remain.

What much does it cost to get a director or authorized signatory in Switzerland?

The price tags of these mandates range between 4,000 and 15,000+ CHF per year, depending on the size and complexity of your company, the taxes saved compared to alternative company headquarters, level of involvement and similar factors. 

Swiss law professionals willing to take up these mandates, will usually charge about twice as much for the directorship mandate compared to the authorized signatory mandate, as they have more responsibilities in their role as a director.

How to find a director or authorized signatory for my company?

Since Switzerland, and particularly the canton of Zug are amongst the most popular places to incorporate a business around the world, there is plenty of demand for these directorship and signatory mandates. Therefore, a quick online search will reveal many such offers, but you should be cautious to choose someone with a positive reputation and clean track record, and with a limited number of similar mandates in place.

At the Office Group Zug, we have a few respected legal advisors, who also offer these services, and our team would be glad to make an introduction for you. 

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