Setting up a Sagl in Ticino: capital, costs, notary

Why choose the Sagl

It is quite common for someone starting a business in Ticino to face the choice between a sole proprietorship and a capital company. The Sagl (limited liability company, art. 772 et seq. CO) is often the right compromise: it limits liability to the company's assets and requires modest capital, within reach of those starting with limited means. It is one of the tools of commercial and corporate law used to give a business a legal form.

One point that guides the choice should be noted at once: in the Sagl the members are liable only with the capital they contribute, not with their personal assets. Whoever operates as a sole proprietorship, by contrast, is liable for the debts of the business with all their personal wealth. That is why, beyond a certain size or a certain risk, it is worth moving to the company form.

The capital: how much is needed and how it is paid in

The minimum share capital of the Sagl is CHF 20'000 (art. 773 CO). Unlike the SA, where only part of the capital may be paid up, in the Sagl the capital must be paid in full at incorporation (art. 777c CO): the contributions must cover the entire nominal value of the quotas.

In practice, before the deed you open a capital deposit account (blocked account) at a bank and pay in the CHF 20'000. The bank issues a deposit certificate, which the notary attaches to the deed. The money stays blocked until registration in the commercial register; from that moment the company may use it for its business.

The capital may also be contributed in kind, for instance with assets or an existing business (contribution in kind). It should be noted that in this case a valuation and additional documents are required, and the notary records this in the deed of incorporation. The quotas into which the capital is divided have a nominal value that the law simply requires to be greater than zero (art. 774 CO).

The role of the notary and the deed of incorporation

The Sagl does not come into being through a simple private agreement. The law requires the form of the public deed: the deed of incorporation must be drawn up by a notary (art. 777 CO). It is the step in which the founders declare that they are forming the company, approve its articles of association and appoint its bodies.

The articles of association are the document that governs the company and must contain at least the business name and registered office, the purpose, and the amount of the share capital and contributions (art. 776 CO). Alongside the articles, the deed appoints the managing officers (the directors of the Sagl) and, where provided for, the auditors.

On this point Swiss law is precise: the company must be represented by at least one person resident in Switzerland, being a managing officer or a director with signing authority (art. 814 para. 3 CO). It is a requirement to be checked before the deed, because without it registration is not granted.

After all, this is exactly where having the notary in the same firm saves time: articles, deed of incorporation and registration are handled without passing between different parties.

The real costs of incorporation

On top of the CHF 20'000 of capital, which stays with the company, there are essentially two expenses to budget for.

The notary's fee for the deed of incorporation, in Ticino, is around CHF 1'000 to CHF 2'000, depending on the capital and the complexity (presence of contributions in kind, several members, particular agreements). The registration fee in the commercial register for a Sagl is about CHF 600.

By way of example: for a Sagl of CHF 20'000 with two members and no contributions in kind, the typical requirement is about CHF 22'500, of which CHF 20'000 is the capital that stays with the company and the rest is incorporation expenses.

From signing to registration: timing and steps

Let us therefore draw the proper distinctions between the steps, in the order in which they take place:

• choice of the business name, registered office and purpose, and drafting of the articles of association;
• opening of the deposit account at the bank and payment of the capital, with bank certificate;
• signing of the deed of incorporation before the notary, with appointment of the managing officers;
• registration in the commercial register of the Canton of Ticino;
• publication in the Swiss Official Gazette of Commerce and release of the capital.

The timing depends above all on the bank and the register. In ordinary circumstances, 2 to 4 weeks pass from the decision to registration. The company exists as a legal entity only from the day of registration (art. 779 CO): before that date no commitments should be entered into in the name of the Sagl.

Sagl or SA: the difference in brief

Those choosing between the two forms usually look at capital and confidentiality. The SA requires capital of CHF 100'000, of which at least CHF 50'000 paid in; the Sagl is set up with CHF 20'000 fully paid in. In the Sagl the members are entered in the commercial register and therefore identifiable, whereas in the SA the shareholders do not appear publicly. For many small and medium Ticino businesses the Sagl remains the simpler and less costly route; but when the anonymity of the owners or opening the capital to investors matters, the SA becomes preferable again.

What it means for those setting up

For the sole founder: the Sagl can be set up alone. However, at least one person resident in Switzerland with power of representation must be designated (art. 814 para. 3 CO): if the sole member resides abroad, a resident managing officer or director must be appointed. Budget for the CHF 20'000 capital to be paid in full and blocked until registration.

For members starting together: define from the outset each one's quotas and the roles in management. These are choices that go into the deed and the articles, and changing them later costs time and a new notarial deed. It is worth setting down in writing, already at incorporation, the rules on decisions, profits and the exit of a member and transfer of quotas.

Frequently asked questions

What is the minimum capital for a Sagl in Switzerland?

The minimum share capital is CHF 20'000 (art. 773 CO) and must be paid in full before incorporation (art. 777c CO). The money is deposited in a blocked account at a bank and stays blocked until the company is registered in the commercial register.

Is a notary required to set up a Sagl?

Yes. The Sagl's deed of incorporation must take the form of a public deed and be drawn up by a notary (art. 777 CO). The notary drafts or checks the articles of association, draws up the deed and arranges the appointment of the managing officers, the basis for registration in the commercial register.

How much does it cost to set up a Sagl in Ticino?

On top of the CHF 20'000 capital, which stays with the company, the out-of-pocket costs are around CHF 1'000-2'000 in notary's fees and about CHF 600 in registration fee.

How long does it take to set up a Sagl?

In ordinary circumstances 2 to 4 weeks, from drafting the articles to registration. The timing depends above all on opening the bank deposit account and on the cantonal commercial register's processing times.

Can I set up a Sagl if I live abroad?

Yes, but the company must be represented by at least one person resident in Switzerland with signing authority, a managing officer or director (art. 814 para. 3 CO). Those residing abroad must therefore plan for the appointment of a representative resident in Switzerland.