Commercial Register: Rights and Obligations

The commercial registry is the most important public database of registered companies and commercial entities in Switzerland. Registering is one of the first hurdles that business owners must cross when founding a new company.

In this article, we explore which companies have to enter the commercial register, what the registration process entails, and the rights and obligations that come with being a registered company in Switzerland.

Entry into the commercial register in Switzerland

The commercial register is a public directory of companies and other legal entities that are engaged in commercial activities. It serves as a vital repository of information for businesses operating in Switzerland.

The databases which make up the register are managed by the individual cantons in which the companies are registered. They are public, meaning that anyone can view the legal status of any registered company operating in Switzerland.

The commercial register plays a vital role in enhancing transparency and facilitating a fair and efficient business environment. Understanding the process of entry into the commercial register, along with the associated rights and obligations, is essential for businesses looking to establish themselves in Switzerland.

Who has to enter the commercial register?

The following types of businesses and commercial entities are obliged to enter the commercial register in Switzerland:

• Sole proprietorships with an annual turnover of CHF 100,000 or more,
• General partnership,
• Limited partnerships,
• Public companies and stock corporations (AG),
• Limited liability companies (GmbH),
• Cooperatives,
• Associations engaged in commercial activities,
• Foundations (excluding family and church foundations),
• Branch offices based in Switzerland, including both foreign and Swiss companies.

Can you register voluntarily?

Yes, sole proprietors with an annual turnover of less then CHF 100,000 may voluntarily enter the commercial register. There are many reasons to consider doing so:

Advantages of entering the commercial register

1. Credibility and trust: Being listed in the commercial register enhances a company’s credibility, fostering trust among clients, suppliers, and partners.
2. Increased visibility: The commercial register is the only public directory of all registered companies in Switzerland, and so being listed on it can increase a company’s visibility and exposure.
3. Company name protection: Companies can benefit from protection of their name upon entering the commercial register. For legal entities such as an AG or GmbH, this means that no other company throughout Switzerland can use the same name for their company. Sole proprietorships operating under a personal name are only guaranteed name protection within the municipality that they operate.
4. Creditworthiness and access to financing: Registered businesses may find it easier to access financing from banks and investors, as the register provides a clear overview of their legal relationships. Additionally, companies that register are automatically subject to bankruptcy in the event of insolvency (i.e., liquidation of assets and distribution to creditors). This means that creditors are better protected, which enhances the company’s creditworthiness.

Disadvantages of entering the commercial register

While most companies entering the commercial register don’t have a choice in the matter, those considering entering voluntarily should also consider the potential downsides:

1. Administrative effort and costs: The registration process can be time-consuming and may involve significant administrative efforts for providing the required documentation. There is also a fee for registering; however, this is only CHF 80 for sole proprietorships. Any changes in the company address, purpose, or other registered information also needs to be reported to the commercial register, which again takes time and incurs additional fees.
2. Public scrutiny: Information in the commercial register is accessible to the public, exposing the company’s details to competitors and other parties.
3. Subject to bankruptcy: If the company is unable to pay off their debts, creditors can demand that the company be declared bankrupt. In such cases, registered companies are forced to liquidate their assets to pay off their remaining debts.

What information is required?

When registering a company with the commercial register, the following information must be provided and becomes publicly available:

• Company nam
• Legal structure of the business (e.g., Sole Proprietorship, GmbH, AG, etc.), which is usually included in the name
• Registered office address in Switzerland
• Purpose of the company
• Names of the shareholders, managing directors, board of directors, and/or authorized signatories
• Year of formation
• Capital relations

What is the cost of registration?

The basic fees for entering the commercial register depend on the company’s legal form, and are as follows:

Sole proprietorship: CHF 80

Limited/General partnership: CHF 160

Limited liability company (GmbH): CHF 420

Public company / stock corporation (AG): CHF 420

Cooperative/Association: CHF 280

Foundation: CHF 210

In addition to these basic fees, there are usually fees for registering the signing authority, preparation of the registration, authentication of registration, legal fees and advice, etc.

Registration process

Entering the commercial register involves the following steps:

1. Gather information and prepare documentation: Collect all required information, including legal structure, registered office, and details of owners or directors. Ensure that all necessary documentation proving the information is in order.
2. Submit application: Submit all the required documents along with the application for registration to the cantonal commercial register office. The application must be signed by all the people required to register (i.e., owners, partners, shareholders, etc.). The signatures for the registration and those of the authorized signatories must be officially certified.
3. Pay fees: Pay the registration fees, which vary based on the legal form of the business.
4. Verification and approval: The commercial register office will check the supporting documents and verify the submitted information. This includes confirmation that all the original signatories are included and officially certified, and whether the articles of association and other documents are in alignment with Swiss corporate law.
5. Correct errors and defects: If there are any mistakes, missing documents, or deviations from regulations, the register office will inform you immediately and you’ll have the chance to correct the defects.
6. Obtain registration certificate: If the application is in order and the documents complete and compliant, your registration will be approved, and the company will thereafter be entered in the cantonal commercial register. Approval takes approximately one to two days. The commercial register also publishes the registration in the Swiss Official Gazette of Commerce (SHAB), which takes about one week after entry in the register.

Rights and obligations of entry in the commercial register

Entry into the commercial register in Switzerland comes with certain rights and obligations that registered companies are automatically subject to:

Obligations

The main obligation of entering the commercial register is automatically subjecting the company to bankruptcy in the case of insolvency. This means that, in the most severe case, an individual creditor can demand that the company be declared bankrupt, and all assets are transferred to the bankruptcy estate to settle outstanding debts (i.e., total liquidation of the company).

Companies also have the duty to update the commercial register of any changes in the company’s structure, ownership, purpose, or other significant details. These updates incur additional fees. Companies agree that certain information will be made publicly available in the register (such as name, legal form, location, etc.)

Rights

Entering the commercial register also protects the company through certain rights, the benefits of which generally outweigh the obligations.

First and foremost, registration protects the name of the company. The extent of the protection depends on the legal form of the company:

• Sole proprietorships: the name is protected only within the locality that the business is registered.
• AGs, GmbHs, partnerships: the company name is protected throughout Switzerland.

Before naming the company, you must confirm that it does not conflict with a pre-existing company’s name as well as any legally protected trademarks in Switzerland. The Swiss Intellectual Property database can be used to check whether there could be any IP infringements.

Additional rights/benefits that come with entry into the commercial register include:

• Easier access to credit and enhanced creditworthiness
• Legal recognition
• Greater possibility for expansion, as partners, clients, and investors can easily verify a company’s credentials.