Distributing Funds from a Private
Company by way of Dividends
(Switzerland)

A Practice Note explaining how to distribute funds from a private stock corporation or company limited by shares (Aktiengesellschaft) (LTD) or a private limited liability company (Gesellschaft mit beschränkter Haftung) (LLC) in Switzerland by way of dividends.

When shareholders invest in a company, they expect to receive a return on their investment. In Switzerland, the most common method of providing this return is through dividends. This Note explains dividends and discusses the legal procedure and practice related to their declaration and distribution by the following forms of private companies in Switzerland:

• A private stock corporation or company limited by shares (LTD) (comparable to a German Aktiengesellschaft (AG), a French société anonyme (SA) and an Italian società anonima (SA)).
• A limited liability company (LLC) (comparable to a German Gesellschaft mit beschränkter Haftung (GmbH), a French société à responsabilité limitée (Sàrl), and an Italian società a garanzia limitata (Sagl)).

Swiss law governing LLCs often refers to the provisions governing LTDs, thereby applying the law governing LTDs to LLCs. Accordingly, the main focus of this Note is on LTDs. For more general information on the types of companies in Switzerland, see Practice Note, Trading Vehicles: Overview (Switzerland).

Outside the scope of this Note are:

• Specific (statutory) rules relating to dividends of listed stock corporations. For more information on listed stock corporations, see Practice Note, Trading Vehicles: Overview (Switzerland): Company Limited by Shares.
• Taxes on dividends.
• Dividends in kind, meaning a dividend that is satisfied by the distribution of assets other than cash or stock dividends (satisfied by the issue of shares).
• Other forms of distributions and returns of funds to shareholders, such as share buybacks, royalty payments, reduction of share capital, and loans.

Unless otherwise stated, a reference in this Note to:

• The "board of directors" means both the board of directors (Verwaltungsrat) of an LTD and managing directors (Geschäftsführer)of an LLC.
• A "company" means an LTD or LLC.
• A "shareholder" means both a shareholder (Aktionär) in an LTD and quotaholder (Gesellschafter) in an LLC.
• A "share" means both a share (Aktie) in an LTD and quota (Stammanteil) in an LLC.

Meaning of Dividend

A dividend is a distribution of a company's profit after tax to its shareholders. In principle, the profit of a company is for the benefit of its shareholders.

The Federal Act on the Amendment of the Swiss Civil Code, Part Five: The Code of Obligations SR 220 (Code of Obligations) regulates all distributions by LTDs, including dividends (Article 675). For LLCs, the provisions of the law on LTDs apply to dividends, including interim dividends, of LLCs (Article 798, Code of Obligations).

For a company to lawfully pay a dividend, it must have sufficient distributable profits (see Determining Whether a Company can Pay a Dividend). A company that has accumulated losses cannot pay...

This article is currently available in preview form only. Due to legal and licensing restrictions, we are not permitted to publish the full text online. If you are interested in accessing the complete article, we would be happy to provide it upon request. Please feel free to contact us directly, and we will gladly assist you.

Thomson Reuters, Practical Law, Distributing Funds from a Private Company by way of Dividends (Switzerland), March 2026