Conversion of GmbH to AG: Step-by-Step Transition Made Easy
This guide walks you through the entire conversion process of turning your limited liability company into a public limited company. Learn how to open up new growth opportunities and attract investors while deciding whether a GmbH or AG is the right legal form to choose.
We also cover the costs involved and key factors to consider in your Swiss business transformation, including the difference between AG and a GmbH in terms of limitation of liability, capital requirements, and shareholder structure. A well-planned transition ensures compliance with legal standards and enhances your company’s market position.
Choosing the Right Legal Form: AG vs GmbH
GmbH vs AG – which form to pick? When choosing the legal form for a company, factors such as capital requirements and shareholder structure play a crucial role.
A GmbH (limited liability company) is ideal when no significant investments are needed, and the number of shareholders remains small and stable. It offers a simpler structure with fewer formal requirements. Unlike the GmbH, an AG must meet stricter capital requirements, but it provides enhanced financing opportunities.
An AG (public limited company) is often the better choice for attracting multiple investors and spreading share ownership, as its share capital is divided into tradable units (shares). The AG makes it easier to raise capital and offers flexibility when new shareholders invest. Prestige and higher business credibility may also justify the conversion of a GmbH into an AG, making it an attractive option for growth-oriented firms.
The most important differences between the GmbH and the AG are listed below:
| Criteria | GmbH (Limited Liability Company) | AG (Public Limited Company) |
|---|---|---|
| Minimum Share Capital | CHF 20,000 | CHF 100,000 |
| Minimum Nominal Value | CHF 100 | CHF 0.01 |
| Anonymity | Names of shareholders, including residence and nominal value of their shares, must be listed in the commercial register. | Shareholders of an AG are not recorded in the commercial register. |
| Management Structure | Typically managed by the shareholders themselves. | Board of directors is responsible for management but can delegate duties to individuals such as a CEO. |
| Liability | Shareholders are personally liable only up to their shareholding. | Shareholders’ liability is limited to the value of their shares. |
Conversion GmbH into an AG – Key Impacts
If a company’s capital requirements or business strategy change, a GmbH can later be converted into AG. This transition is particularly beneficial for businesses aiming for greater financing flexibility and broader investment opportunities.
The Swiss Merger Act allows businesses to change their legal form from a GmbH to AG even after incorporation. This is especially advantageous if the company requires additional funding or wants to attract new investors. Unlike the GmbH, an Aktiengesellschaft (AG) is better suited for capital-intensive expansion and facilitates the issuance of shares.
When converting a GmbH, the company’s existing structure remains unchanged—only the legal form is modified. There is no legal succession and no transfer of legal relationships. What does this mean in practice? Existing contracts remain valid. All rights and obligations transfer to the new corporation automatically. Current shareholders retain their rights and receive shares in the PLC in proportion to their previous ownership.
Process for Converting
Two individuals prepare a conversion report for changing a GmbH into an Aktiengesellschaft to enhance the company’s reputation. The conversion process typically follows these steps:
- Preparation of the balance sheet
- Creation of the conversion plan
- Drafting of the conversion report
- Completion of the auditor’s report
- Sending invitations for the shareholders of the AGM
- Passing the conversion decision
- Filing for registration in the commercial register
By carefully planning and executing the transition, a company can fully leverage the benefits of converting a GmbH into an AG. The conversion process usually takes two to four weeks to complete and must comply with the legal requirements.
How to Convert a GmbH (LLC) to AG (PLC): Transition In Detail
The process of converting a GmbH into an AG in Switzerland involves several key steps. This transition requires legal and financial adjustments to meet the regulatory requirements.
1. Capital Increase
Setting up an AG, a minimum capital required of CHF 100,000 is necessary. At least CHF 50,000 or 20% of the limited share capital must be paid in at the time of conversion. Since a GmbH must meet this financial threshold, a capital increase is required to fulfill the legal obligations.
Steps for capital increase:
- Capital deposit: The shareholders pay the capital into a blocked bank account or convert freely available equity (e.g. profit reserves) into share capital.
- Notarial resolution of the shareholders and directors: This formal resolution is necessary to carry out the capital increase.
The legal documentation should be prepared by a legal advisor. The capital increase must be carried out before the conversion in accordance with the regulations governing the GmbH.
2. Resolution to Convert the GmbH into an AG
After the capital increase, an additional general meeting (GM) is held before a notary. At the GM, the shareholders decide on the conversion of the GmbH into an AG.
3. Key Documents for Conversion
Several legally required documents must be prepared and submitted:
- Legal Documentation. The necessary documents include the transformation plan and transformation report, the resolution of the board of directors and the new articles of association.
- Conversion Balance Sheet. The balance sheet must be based on the most recent financial statements, which should not be older than six months. If the company qualifies as a medium-sized business, it may be subject to fewer auditing requirements.
4. Registration with the Commercial Register
Finally, the change in legal structure must be filed with the commercial register. Only after this step the conversion becomes legally effective.
The capital increase, the resolution of the general meeting, the legally required documents and the entry in the commercial register are key steps in the conversion of a GmbH into an AG. Professional help is often needed for this.
Key Takeaways
- The company and its shareholders must complete the capital increase before the transition.
- The new articles of association need to include provisions that ensure compliance with AG regulations.
- Registration in the commercial register is the final step, making the conversion legally binding.
While the choice between AG and GmbH depends on business goals, the AG structure offers benefits such as easier access to the stock exchange and the ability to issue registered shares. However, it also requires stricter governance and financial transparency. Additionally, companies may face enhanced reporting obligations.
Professional guidance is advisable throughout the conversion process to ensure compliance with the Swiss Code of Obligations to avoid complications.
