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New Corporate Law: Share capital in foreign currency (no. 11)

The new organization legislation, which arrives into force on 1 January 2023, delivers numerous changes. In our existing blog site sequence, we existing these in element.

Minimal cash

The share cash of a Swiss stock company (Ltd) must total to at least CHF 100,000, of which at least 50 percent must be compensated-up in cash, by contribution in form or by offsetting at the time of incorporation. This will have to be notarised. For a minimal legal responsibility corporation (LLC), at minimum CHF 20,000 will have to be elevated partial liberation is not permitted. These simple principles do not change below the revised enterprise regulation.

Accounting in foreign practical currency

Underneath the existing legislation the share capital must be strictly denominated in Swiss francs and also entered accordingly in the articles or blog posts of affiliation and in the business register. Having said that, the bookkeeping and accounting of a Swiss corporation can now be completed in a international forex if it is the so-named useful currency important for the company’s company action and this is freely convertible against the Swiss franc (art. 957a para. 4, 958d para. 3 of the Swiss Code of Obligations (CO)).

In contrast, it has so considerably been necessary for the share cash associated areas of a Swiss business (e.g. like the reserves and the board of directors’ proposal for the appropriation of income to the typical meeting) to be documented in Swiss francs. The trade charges employed are to be disclosed in the notes to the annual economical statements and discussed the place applicable.

In follow, this can outcome in conversion discrepancies on the a person hand, for example if acquisition or generation costs are dependent on historical trade fees that have transformed considerably in excess of time. In extreme circumstances, an yearly financial gain calculated in practical foreign currency can flip into an once-a-year loss in Swiss francs because of to the conversion and the renewed software of the theory of prudence.

Even further sensitive difficulties of application might arise. For case in point, the board of directors need to, as a precautionary evaluate, get suitable reorganisation measures or, if needed, notify the personal bankruptcy choose even if about-indebtedness effects both only in Swiss francs or only in the overseas currency, but not in the respective other currency. On top of that, in observe, an audit confirmation pursuant to art. 6 of the Merger Act is also deemed needed if an meant merger final results in a money reduction or above-indebtedness only in one of the applicable currencies.

Share capital in useful overseas currency

With the revision of organization legislation, it will be permissible from 1 January 2023 to also point out the share money of a Swiss company in a foreign useful forex (art. 621 revOR). If the company makes use of this choice, the bookkeeping and accounting should be accomplished in the exact currency.

These new procedures hence eliminate the at present present inconsistency concerning accounting, money reporting and tax regulation on the just one hand and the provisions of organization regulation on the forex of the share money on the other. This revision satisfied with broad acceptance all through the session approach.

The total of the share capital and the forex in which it is denominated shall be determined in the articles or blog posts of association. If the share funds is denominated in a international currency, the contributions designed at the time of the formation of the enterprise need to be equivalent to at the very least CHF 50,000 in the scenario of a Ltd (or CHF 20,000 for an LLC). If the share capital is set in a international currency or if contributions are manufactured in a currency other than that of the share money, the trade rates applied will have to be said in the general public deed.

Permitted foreign currencies

In Annex 3 to the revised Industrial Sign-up Ordinance, the Federal Council has specified the pursuing international currencies as permissible from 1 January 2023: British Pound (GBP), Euro (EUR), U.S. Dollar (USD) and Japanese Yen (JPY).

Absolutely nothing will transform as a consequence of the revision of the enterprise regulation with regard to the current tried and examined apply of the commercial sign-up authorities that shareholders could make their contributions in a (international) currency that is freely convertible to the Swiss franc (in potential usually to the currency in which the share funds is denominated): This exercise will now be codified in the new regulation.

Moreover, payments with crypto “currencies” this kind of as Bitcoin (BTC, BCH, BCC, BTG, etc.) or Ether (ETH) in unique are still not to be thought of as money redemptions, but as contributions in form, with different particular policies.

Alter of forex of the share money

The basic meeting may possibly take care of to modify the currency in which the share capital is denominated at the beginning of a economical year. This improve may well be built either prospectively with influence as of the commencing of the future economical calendar year or retrospectively as of the beginning of the latest financial calendar year. In possibly situation, the board of administrators shall amend the posts of association. In performing so, it will have to set up that the previously mentioned-mentioned needs for stating the share money in the suitable currency are fulfilled and document the exchange charge utilized. The resolutions of the basic conference and the board of directors need to be publicly qualified. An audit report is not needed.

A forex alter (with result from 1 January 2023 at the earliest) can thus also be resolved in the recent 12 months 2022. The corresponding amendment to the articles or blog posts of affiliation must be conditional on the entry into power of the new regulation. Having said that, if the content of affiliation are (unconditionally) amended once again prior to 1 January 2023, the conditional modification to the content articles of affiliation on the forex adjust would have to be resolved yet again.

It should normally be pointed out that the transform of currency have to not guide to a concealed funds raise or lower (distinctive restrictions would have to be observed for this in every single circumstance).