Paying in and releasing capital: the rules

Forming a corporation means endowing it with its own capital, and endowing it with capital means “releasing” it: actually placing at the company’s disposal the values declared in the articles of association. Between the figure written in the deed of incorporation and the money genuinely available lies a precise procedure, one that the commercial register checks. Let’s look at how it works for the AG and the GmbH.

Subscription and release: two different things

Subscribing capital means committing to contribute a certain sum; releasing it means paying it in or placing it at the company’s disposal. Subscription is a promise, release is the execution. Swiss law requires that, at the moment of incorporation, the capital be subscribed in full and released according to the statutory thresholds.

The minimum capital

• AG: minimum share capital of CHF 100,000.
• GmbH: minimum nominal capital of CHF 20,000.

These are the reference figures under Swiss law. The difference is not merely one of amount: the rule on minimum release changes too.

How much must be released immediately

For the GmbH, with the reform that entered into force in 2023, the capital must be released in full: the nominal shares must be paid in for their entire value.

For the AG, the law permits partial release, but with a floor: at least 20% of the nominal value of each share must be released and, in any event, an aggregate amount not lower than CHF 50,000. The unreleased portion remains an obligation of the shareholders, callable by the company. In practice, anyone forming an AG with CHF 100,000 of capital must make at least CHF 50,000 available upon incorporation.

The bank deposit account

For contributions in cash, the mechanism is standard:

1. a capital deposit account (or capital contribution account) is opened at a bank in the name of the company being formed;
2. the founders pay in the subscribed amounts;
3. the bank issues a deposit confirmation attesting that the sums are available for the exclusive benefit of the future company;
4. this confirmation is presented to the notary and attached to the application filed with the register.

The sums remain blocked and become freely usable by the company only after registration. It is a safeguard: it prevents the declared capital from being a fiction.

Contributions in kind

Capital may be released not only in cash but also through contributions in kind: economically assessable assets transferable to the company (machinery, real estate, portfolios, an existing business). In this case additional precautions are required:

• a contribution agreement in written form or by public deed, depending on the nature of the asset;
• a description of the assets and the indication of the value attributed to them;
• the entry of the contributions in kind in the articles of association and their mention in the deed of incorporation.

Similar rules apply to asset acquisitions and to any special privileges granted to the founders: everything must emerge transparently, to prevent the capital from being inflated through indulgent valuations.

Capital in foreign currency

Following the recent reform, capital may also be denominated in a foreign currency (for example euro, US dollar, sterling or yen) that is essential to the business, provided the accounts are kept in the same currency and the equivalent value meets the statutory minimum at the moment of incorporation. It is a useful option for companies strongly oriented towards a foreign market.

After incorporation: mind the capital

Releasing the capital is not enough: it must also be preserved. Swiss law prohibits the repayment of contributions to shareholders and limits distributions to profits and available reserves. If the capital is partly unreleased (AG), the company can call it in when needed, and the shareholders remain bound. Capital treated as a personal account is one of the most frequent causes of problems with the auditor and, in serious cases, of liability.

Mistakes to avoid

• Confusing the AG’s minimum release with “reduced” capital: the nominal value remains CHF 100,000, only how much you pay in immediately changes.
• Opening the deposit account with generic references: it must be clear that this is a deposit of the capital being formed.
• Improvising contributions in kind without adequate documentation and valuation.

How we work at SIH ONE

We define with you the capital structure — amount, currency, portion to be released, any contributions in kind — coordinate the opening of the deposit account and the related confirmation, and prepare articles of association and a deed of incorporation that are consistent, so registration runs smoothly.

Do you want to set up your company’s capital and release correctly? Discover the services of our corporate division and incorporate on solid foundations.