Profit distribution in public limited companies (AG) and private limited companies (GmbH)

AG and GmbH companies are not permitted to distribute their profits freely in full. Swiss company law stipulates that reserves must be formed before profits can be distributed. These serve to protect creditors and ensure the financial stability of the company.

First, the statutory reserve portion must be taken into account: five per cent of annual profits must be allocated to the statutory profit reserve until, together with the statutory capital reserve, this reaches 50 per cent of the share capital or nominal capital (20% Holding companies). Only the remaining profit is then available for distribution.

In addition, the articles of association or the general meeting may decide to create voluntary reserves. These also reduce the profit that may be paid out as dividends.

The decisive factor is therefore not the reported annual profit, but the balance sheet profit after reserves have been formed. Any distribution contrary to these requirements may result in repayment obligations and liability consequences.