AG vs. GmbH: Why the AG is better suited for Swiss high-growth startups.

Choosing the right type of legal form is crucial for founders and entrepreneurs. For fast-growing startups in particular, the question arises as to whether an AG or a GmbH is more suitable. In this article you will find out why the AG is essential for high-growth startups in particular and what specific advantages it offers compared to the GmbH.

Main differences between the AG and the GmbH

Advantages of the AG for high-growth startups

Raising capital: easy access to investors

Raising capital is often vital for high-growth startups. The AG offers decisive advantages:

• **Easier capital increases:**Capital increases are more straightforward as shareholders do not need to be registered in the commercial register (unlike a GmbH).
• **Public offer and IPO:**Shares can be offered to the public and traded on the stock exchange, which facilitates access to capital and potential investors.
• **Capital band and conditional capital:**The board of directors can flexibly decide on capital increases and issue options to employees or shareholders.

Sale of shares: Flexibility and anonymity

The sale of shares is very different between an AG and a GmbH:

• **GmbH:**The transfer of capital contributions is a complex process that usually requires the approval of the members’ general meeting and has to be registered in the commercial register.
• **AG:**Shares can usually be traded very easily. The transfer usually requires a hand-written (or QES) signed declaration of assignment. Another special feature of an AG is that the names of the shareholders are not entered in the commercial register and they therefore remain anonymous.

Employee ownership programmes: Attractive incentive schemes

It is particularly important for startups to attract qualified employees. In contrast to the GmbH, the AG offers more flexibility:

• Stock options: Stock options are easier to issue with an AG. This is because the AG can create conditional capital. This means that the company can issue new shares without the consent of existing shareholders. This simplifies and speeds up the process of issuing shares.
• **More attractive incentive structure:**Share ownership is often more attractive to employees than other forms of compensation because it offers the prospect of a financial stake in the future success of the company. This can be a powerful motivator, particularly in the growth phase of a startup.

Shareholder rights and obligations: fewer obligations, more freedom

With a GmbH, the members are often more closely involved in the company. This means that their personal characteristics and relationships play a greater role. For example, the articles of association of a GmbH may contain obligations to make additional contributions or general non-compete clauses.

By comparison, an AG offers shareholders more freedom and fewer obligations. This makes the AG particularly attractive to investors and the management.

Conclusion: The advantages of the AG for high growth startups

The choice of legal form has far-reaching effects on the growth and success of a startup. Despite the lower minimum capital and simpler formation requirements of the GmbH, the AG offers decisive advantages, especially for high-growth startups:

• Easier to raise capital: Easier access to capital than a GmbH.
• Flexible sale of shares: More flexible and easier transfer of shares and anonymity of shareholders.
• Attractive employee participation programmes: Varied and attractive incentive programmes for employees.
• Fewer obligations for shareholders: Fewer obligations for shareholders and more freedom for the management.

The AG is the right choice for high growth startups!