The new limited liability company law (SARL)
Pietro MOGGI, notary and lawyer in Lugano, and Olivier JACOPIN, notary in St-Aubin
The new Act on limited liability companies (SARL) came into force on 1st January 2008. The reform aimed to give this corporate form the attributes of a genuine capitalised company while maintaining its personal aspect, with partners able to insert a number of optional clauses into the articles. Here is a brief summary of the main new features:
a) A limited liability company may now have one founder only (before it was at least two), who can in fact own several shares if required.
b) Although the minimum company capital is still 20,000 Swiss Francs, it now needs to be completely released. The upper limit of 2,000,000 Swiss Francs has been abolished.
c) The nominal value of company contributions cannot be lower than 100 Swiss Francs (hitherto 1,000 Swiss Francs).
d) During the “qualified” foundation of an SARL (contributions in kind, acquisition of assets, etc.), it is necessary to comply with the provisions corresponding to public companies (SA), in particular – and this is new – by producing a foundation report and an auditor’s certificate.
e) Each partner’s liability is limited, when applicable, to additional payments linked to his or her share and set out in the articles. In other words, the new SARL completely protects the partner against any personal financial liability.
f) The capital share transfer deed – and the promise to transfer – can take a written form and no longer needs to be authenticated.
g) The transfer of a capital share requires the approval of the partners. The decision requires at least two-thirds of partners to be represented and the absolute majority of the company capital.
h) A company capital increase requires a decision by the partners’ meeting and must be executed by the designated managers (as for public companies) in authenticated form.
i) The provisions of public company law concerning compulsory notice in the case of loss of capital and excess debt are applied by analogy to limited liability companies.
j) A limited liability company can acquire its own company contributions only if it has free access to funds equivalent to the sum of the necessary expenditure and if the nominal value of all the company contributions to be purchased does not exceed 10% of capital stock.
k) Both the list of provisions to be featured in the articles in order to be valid (e.g. restriction of transmissibility of capital shares, rights of emption and pre-emption, special capital shares, obligation to make additional payments, right of exit and exclusion, ban on competition) and the list of non-transferrable attributions of the partners have been extended.
l) The legal notice to convene the partners’ meeting is now 20 days (articles being reduced to 10 days).
m) The decisions of the partners’ meeting can be confirmed in writing, unless a discussion is required by a partner.
n) Each partner leaving the company is required to make the additional payments set out in the articles for three years.
o) Unless specified to the contrary, each manager can individually represent the company with respect to third parties; if there are several designated managers, the partners’ meeting should appoint a president.
p) At least one person authorised to represent the company (designated manager or director) should reside in Switzerland.
q) Non-transferrable and inalienable attributions of designated managers are now clearly defined, thus filling a loophole in the old law.
r) As far as auditing is concerned, the new limited liability (SARL) law (like the law on public companies – SA) now sets out classification into “large” and “medium” SARLs subjected to ordinary and limited auditing respectively. In certain cases, companies do not even have to audit.
Existing limited liability companies are required to adapt to the new Act by 31st December 2009. However, the matter of the auditing body needs to be settled even before 31st December 2008. swisNot notaries provides personalised advice.
Lugano and St-Aubin, 01.01.2011