Realizable and transferable contributions in kind

If you wish to establish a corporation ( LLC or stock corporation) in Switzerland, you must raise a certain minimum amount of capital. You can either pay this capital in cash or make a contribution in kind. A contribution in kind means that instead of money you transfer an object, a claim or another asset to the company. In return, you receive shares in the company.

A contribution in kind can be an interesting alternative to a cash contribution if you have assets that you no longer need or that you would like to contribute to the company's business. For example, you can contribute a vehicle, a machine, a patent or an interest in another company as a contribution in kind.

However, you must note that not every item is suitable as a contribution in kind. The contribution in kind must meet certain requirements to be recognized as capital. These are:

• Recognizability/capitalizability: the contribution in kind must have a clearly defined value and be recognizable in the company's balance sheet.
• Transferability: The contribution in kind must be legally and actually transferable to the company.
• Availability: The contribution in kind must be available at the time the company is formed and must be free of third-party rights.
• Usability: The contribution in kind must be of use to the company and must be capable of being sold or pledged if necessary.

The following are eligible as realizable and transferable contributions in kind:

• Property (e.g. land, buildings, machinery, stock, vehicles).
• Obligatory rights (e.g. claims against third parties)
• Intellectual property rights (e.g. patents, copyrights)
• Securities and participations (e.g. shares)
• Non-cash assets (e.g. a partnership upon conversion into a corporation)

If you wish to establish a contribution in kind, you must submit a written contribution in kind agreement, a formation report and an audit confirmation from a licensed auditor in addition to the usual formation documents. These documents serve to prove the nature, condition and valuation of the contribution in kind.

Thus, a contribution-in-kind formation can be a viable option if you have realizable and transferable assets that you want to contribute to your company. However, you will have to consider some legal and accounting aspects and factor in additional costs for preparing and reviewing the required documents.

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