How to create an plc: the complete checklist
You want to set-up a public limited company? Before you get started, here's everything you need to know about this popular legal status!
Setting up a public limited company + Checklist
In Switzerland, the public limited company (AG / Inc. / plc) is the most common legal form, with the proprietorship. It can be formed by one or more natural or legal persons. You wish to create a public Limited Company? Before you start, let’s take stock of the benefits and drawbacks of this status. To what extent can the AG / PLC / Inc. be adapted to your project?
And finally, what are the essential steps to get your company off the ground?
Let's zoom in on this reliable and very reputable status in Switzerland, which may help you in the deployment of your professional projects!
Why create a limited company (plc)?
Since with a public limited company, the share capital is higher than with a limited liability company (GmbH / LLC/ Ltd), the collateral to third parties that you own is logically higher.
To know if this status is adapted to your activity, you will have to take stock of your prospects for development. In this sense, if the turnover forecasts are important, and if it is essential for your activity to deal with many third parties, it will be wiser to resort to forming a limited company than a limited liability company.
Moreover, if you are planning a rapid development of your activity, which requires the contribution of foreign funds, it is indeed towards this status that it is interesting to turn to.
Bank, investors, shareholders buy-in: if the involvement of third parties is essential to the development of your business, this status is particularly well suited.
Benefits and drawbacks of the Limited Company AG / Inc. / plc
Advantages of the AG / Inc. / plc
When you create a Limited Company, you are free to choose your company name. Moreover, if you use your last name, you will simply have to add the entry "Inc", which is mandatory. Please also note it will be entirely possible to change the name of your company after its creation. To do so, an amendment to the articles of association by the general meeting will be necessary. Indeed, this is an authentic deed, which will have to be registered in the commercial register.
One of the main advantages of a public limited company is the level of responsibility incumbent on the shareholders: they are only liable for their stake in the share capital. However, in the event of negligent action, or in case of misdemeanor, the management can be made liable with their personal assets.
In addition, shareholders who work within a corporation (Inc.) are considered as employees. They are therefore entitled to the social benefits associated with this status and are therefore compulsorily insured.
As far as taxes are concerned, here again, the status of a public limited company offers an important advantage: indeed, the incrementality (i.e. the increase in tax rates for the higher portions of profits) can be interrupted by the splitting of profits.
The drawbacks of the AG / Inc. / plc
In order to create a Limited Company, the minimum capital to be contributed is CHF 100'000.-. This is a large sum, which must be factored in when budgeting for the costs of creation. However, it is not necessary to pay this sum in cash: indeed, it is possible to distribute this amount as 'contributions in kind': machinery, real estate...
Also, beware: the management fees associated with this status are high. Indeed, with a public limited company, you are required to produce management reports, to set up a general meeting, to draw up tax forms and to set up auditing bodies.
In addition, with this legal status, you are subject to double taxation of the corporation yield and capital. You also have to pay income tax (dividend) and wealth tax to the shareholders.
In addition, when you opt for the public limited company legal status, you are obligated to follow very strict measures to carry out your accounting. Rigor is therefore required, and you will need to surround yourself with a competent accountant who will accompany you in this task!
Checklist for setting up a Limited Company
Having considered the many benefits but also the drawbacks associated with the creation of an AG / Inc. / plc, it is time to move forward. In order to set up your Limited Company, here are the steps that are essential.
Budget for the creation costs that you will incur
This is an essential step in setting up any company. First of all, it will be essential to budget your start-up costs. It is this step that will enable you to build a coherent forecast and calculate with precision your project financing needs.
This is the key step that gives you the possibility to optimize the durability of your company. However, you should not omit any costs: the cost of the market study, the cost of creating your business plan, communication expenses, the creation of a website, administrative costs, registration in the commercial register, notary's office, registration of your trademark or patent, etc.
Every detail must be well thought out in order to accurately determine the components of your budget.
Determining the company name
When the creation budget is completed, it is time to think about the name you will use for your Limited Company.
This choice is completely free. However, the company name you will choose plays a symbolic and essential advertising role.
It actually carries the reputation and credibility of your company. Turn to a name related to your company's activity, service or product.
This way, customers and prospects will be able to clearly understand what your business is all about: transparence is the order of the day!
Registering your Inc. in the Commercial Register
The next step in the creation of your AG / Inc. / plc will be to register it in the Commercial Register, which will also support your credibility with third parties: if you want to open a bank account, a post office box or a business telephone line, this registration in the Commercial Register is a considerable advantage!
Determining the amount of capital and organs
After that, you will have to determine the amount of your share capital. It will also be necessary to decide on the division of shares and their release.
In order to establish how your company will operate, it will be essential to appoint its constituent bodies: you will have to appoint the board of directors and the auditing institution. Also at this stage, define the person or persons who will be authorized to sign the official documents of the public limited company being created.
Choosing your financial partner
In order to move forward in the process of setting up your plc, it will then be useful to choose the bank where you will open your escrow account for the basic contribution.
Drawing up the foundation deed and the foundation regulations
In order to set up your plc, you are required to draw up company memorandum and articles of association.
What must the articles of association of your AG / Inc. / plc contain?
Several elements must be included in the public limited company articles of association:
- the company name
- the corporate purpose
- the head office
- the powers of representation of the AG bodies
- the amount of share capital
- the number of shares
- the terms and conditions of general meetings
- the appointment of directors
- the appointment of the auditor
The deed of foundation contains the basic provisions on the organisation, assets and purpose of the foundation. Thus, it contains various information, such as the amount of capital, initial assets, the purpose of the foundation, the name and registered office of the foundation, as well as the organisation and management of the company.
In addition to drawing up the deed of foundation, you will also have to draw up the foundation regulations: it is this document that governs in particular the details of your company's organization and administration.
Once these two documents have been drawn up, you must submit them to the notary and to the Commercial Register. Subsequently, it will be essential to require a declaration of acceptance by the auditors.
Organizing the foundation meeting
In order to optimize your company's management and operation, it is essential to carefully organize the foundation meeting. In a public limited company, the shareholders' general meeting is convened by the board of directors.
However, in some exceptional situations, the meeting may be called by the auditor. In a public limited company, each shareholder who holds more than 10% of the capital may require the Board of Directors to convene a general meeting.
The board of directors, for its part, must include at least one member. Furthermore, only a natural person may be appointed as director of a public limited company. It should be noted that at least one of the Board of Directors' members must reside in Switzerland.
Releasing the payment of shares
The next step to follow in the creation of your AG / Inc. / plc will consist in releasing the payment of the shares with the bank of your choice. To do so, you will only need to present an extract from the commercial register.
Drawing up a share certificate and opening a share register
Since the 1 July 2016 law, public limited companies must establish a share register. This document mentions the names and addresses of the owners and beneficial owners of registered shares.
In the case of bearer shares, the holders must be notified to the company within one month of the acquisition of the share. In addition, it is also mandatory for the company to draw up a list of the beneficial owners, regardless of whether they hold bearer shares or registered shares.
Registration with the compensation fund
When you create a new company, the issue of AVS/AHV has to be brought up next.
Every employee who works in your AG will have to be registered with the compensation fund. It will also be necessary to subscribe to compulsory pension contracts:
- LPP (loi sur la prévoyance professionnelle vieillesse, survivant et invalidité) / LOR (Law on Occupational Retirement, Survivors' and Disability Pension Plans)
- LAA (loi sur l’assurance-accidents / AIA (Accident Insurance Act).
As a founder, you are also considered an employee. As such, you will have to take these steps, even for yourself!
Depending on the sector you operate in, you will need to clarify your VAT liability.
If you are liable for VAT, you will have to file your return with the Federal Tax Administration.
If you wish to set up a public limited company, these few steps are essential. Even if there are many points to consider, this highly prized legal status can really be a real plus for the deployment of your entrepreneurial projects!
Ready to get started?