Swiss Shell Company Ban 2025: What Entrepreneurs Need to Know Now – and Which Alternatives Exist
Since 1 January 2025 trading in shell companies has been regulated by statute: Articles 684a and 787a of the Swiss Code of Obligations draw clear lines. What this means in practice, what is still permitted – and how you can still set up a Swiss business presence quickly and securely.
- ✛Since 1 January 2025 the transfer of shares in shell companies is void under Art. 684a/787a CO.
- ✛Void means the transaction is deemed never to have happened – with liability risks for new officers.
- ✛Commercial registers may request the annual accounts and refuse entries where they suspect abuse.
- ✛Properly capitalised shelf companies are generally not caught by the ban – some uncertainty remains.
- ✛Legally secure alternative: UK Limited with a Swiss branch, ready in 2–3 weeks.
What is shell company trading – and why was it a problem?
A shell company is a Swiss AG or GmbH still entered in the commercial register but economically empty: no business activity, no realisable assets. In shell trading the majority of shares in such a company is transferred – usually to save the time and cost of liquidation and re-incorporation.
The problem: shell companies were frequently abused. Employees were re-hired by a successor company while the old one went bankrupt; production assets were bought out of the bankruptcy estate below market value while suppliers were left with unpaid invoices. In organised form this is known as “company burial” or serial bankruptcy.
The Federal Supreme Court had treated shell trading as unlawful for decades. An express statutory basis, however, was missing until the end of 2024.
What the new law regulates from 1 January 2025
The Federal Act on Combating Abusive Bankruptcy introduced Art. 684a CO (AG) and Art. 787a CO (GmbH). The transfer of shares or capital contributions is void if all three conditions are met at the same time:
- 1The company has no business activity.
- 2It has no realisable assets.
- 3It is over-indebted.
The criteria are cumulative. In one respect the law goes beyond previous case law: the Federal Supreme Court did not require over-indebtedness – Parliament added this criterion.
What “void” means in practice
- ✛The transaction is deemed never to have taken place – retroactively.
- ✛The buyer does not become owner of the shares; good-faith acquisition is excluded.
- ✛Purchase prices paid must be unwound.
- ✛Newly appointed directors or managers have no valid position – their acts may be ineffective.
- ✛Third parties may claim damages against the supposed officers.
New controls at the commercial register
Under Art. 65a of the Commercial Register Ordinance registries have extended powers. Where there is reasonable suspicion of void shell trading, they can request the current annual accounts and refuse an entry.
Suspicion arises in particular if several registered facts – purpose, seat, name or board – are changed simultaneously or in succession, if the company shares a domicile with a company already refused registration, or if persons involved were previously part of a refused transfer.
In addition, bankruptcy officials must report suspected offences, and criminal courts can impose activity bans on people acting behind the scenes (Art. 67a para. 2 Swiss Criminal Code).
What is still permitted: shell vs. shelf company
| Shell company | Shelf company | |
|---|---|---|
| History | Formerly operating, activity ceased | Never operational |
| Assets | No realisable assets | Fully paid-up capital |
| Balance sheet | Over-indebted | Not over-indebted |
| Legal position | Transfer void (Art. 684a CO) | Generally permitted |
The prevailing legal doctrine confirms that a properly managed shelf company with paid-up capital is not caught by Art. 684a CO, as the paid-up capital constitutes realisable assets.
Registry practice is still evolving and some legal uncertainty remains. Only acquire a shelf company through a reputable provider and verify that it was never operational, has no legacy issues, is fully capitalised and has clean books. Swiss banks also scrutinise such companies closely.
The sober assessment: three options
| Option | Time | Capital | Assessment |
|---|---|---|---|
| New Swiss GmbH | 4–8 weeks | CHF 20,000 | Cleanest legally, no legacy issues |
| Buying a shelf company | Short-term | Paid up | Permitted, but residual uncertainty and strict bank checks |
| UK Ltd. with Swiss branch | 2–3 weeks | No minimum capital | Legally secure, fast, cost-efficient |
The alternative: UK Limited with a Swiss branch
Anyone who wants to establish an operating presence in Switzerland quickly and securely has a proven, fully legal structure in the English private limited company (Ltd.) combined with a Swiss branch.
How the structure works
The Ltd. is incorporated at Companies House in the UK and acts as parent company. A branch is then entered in the cantonal commercial register. It appears in the register, concludes contracts and is taxable in Switzerland – in business dealings practically like a Swiss company.
Legal basis
The basis is Art. 931 para. 2 CO and Art. 109 et seq. of the Commercial Register Ordinance. Unlike an AG or GmbH, registering the branch has only declaratory effect – the Ltd. already exists through its incorporation in England. At least one authorised signatory must be resident in Switzerland (Art. 160 para. 2 PILA); SWICOR can take on this role via a board mandate.
Liability and tax
Shareholders are generally liable only with the company’s assets. For tax purposes, the Switzerland–UK double tax treaty looks to the place of effective management: if it is in Switzerland, profits are taxed here – with no disadvantage compared with a GmbH. The branch needs no minimum capital of its own; the Ltd. can be formed from £1, though higher capital strengthens bankability.
The process – step by step
- 1Incorporating the UK Limited (1–3 working days): filing Articles and Memorandum of Association at Companies House, issue of the Certificate of Incorporation.
- 2Board resolution: formal resolution to establish the branch, including appointment of the authorised signatory/signatories.
- 3Documents for the commercial register: apostilled register extract, certified translation of the Articles, board resolution, proof of domicile, IDs and certified signatures.
- 4Entry in the commercial register (1–2 weeks): review by the cantonal registry, publication in Zefix – fully operational from then on.
- 5Account opening: the business account is opened after registration.
Ongoing obligations: the usual accounting and tax duties apply in Switzerland; in England an annual Confirmation Statement and simplified annual accounts. Our back office can handle this efficiently on request.
The SWICOR package: UK Ltd. + Swiss branch
SWICOR offers the complete set-up as a transparent flat-fee package from a single source:
- ✛Incorporation of the English Ltd. at Companies House
- ✛Registration of the Swiss branch in the cantonal commercial register
- ✛Business bank account
- ✛All notary and commercial register fees
Flat fee: CHF 1,800 · Timeframe: 2–3 weeks. You end up with a ready-to-use structure entered in the Swiss commercial register with a bank account – without a CHF 20,000 capital contribution and without the risks of a shell purchase.
UK Ltd. with Swiss branch – flat fee CHF 1,800.
Company formation England →Which solution suits whom?
- ✛Purely Swiss structure, minimum capital available: new Swiss GmbH.
- ✛Fast, cost-efficient, no minimum capital, international focus: UK Ltd. with branch.
- ✛Interested in a shelf company: only after careful legal review with an experienced adviser.
Conclusion
The shell company ban creates legal certainty and ends a long-standing abuse. For serious entrepreneurs it is not a setback but a reason to rely on clean alternatives. The UK Ltd. with a Swiss branch offers full legal certainty, a Swiss market presence, manageable costs and a clear timeframe.
Frequently asked questions
Is buying a Swiss shelf company still legal?
Shelf companies that were never operational and are fully capitalised are, in the prevailing view, not caught by Art. 684a CO, as the three cumulative criteria are not met. Some uncertainty remains because registry practice is still evolving.
What happens if I unknowingly bought a void shell company?
The transaction is deemed never to have happened, the purchase price must be unwound, and anyone who has already acted as an officer faces liability risks. Immediate legal advice is recommended.
Do I need to live in England as owner of the UK Limited?
No. The Swiss branch does, however, require at least one authorised signatory resident in Switzerland (Art. 160 para. 2 PILA). SWICOR can take on this role.
Where does the branch pay tax?
The place of effective management is decisive. If it is in Switzerland, profits are taxed in Switzerland – just like a GmbH.
How long does the set-up take?
Incorporating the Ltd. takes 1–3 working days, registering the branch 1–2 weeks. Including the bank account, everything is usually completed within 2–3 weeks.
What does the CHF 1,800 flat fee include?
Incorporation of the Ltd., registration of the branch, opening of a business account and all notary and commercial register fees – with no hidden extras.
The right structure for your Swiss presence
We assess, without obligation, whether a new GmbH, a shelf company or a UK Ltd. with a Swiss branch suits your plans.
This article is a general analysis and does not replace individual tax or legal advice. Regulations change; the information reflects the status at the date of publication.