When one wishes to pursue a non-profit activity, two legal forms are recommended by Swiss law: the non-profit Foundation and the Association. What status should we choose? This article presents the elements to be considered when making this choice.
First of all, what is an association and a foundation? What differentiates them?
Is formed from a minimum of 2 natural and/or legal persons, for a non-profit purpose. These people will work to pursue the objective of the association. No registered capital is required for its formation. The association is created as soon as the statutes are drafted and validated by the constituent assembly (the creators of the association, present at the meeting. The presence of a lawyer is strongly advised. The statutes establish the purpose of the association and its internal organization, which must obligatorily contain a General Assembly (all members of the association) and a Committee with a President, a Secretary and a Treasurer. The statutes freely determine the body competent to amend them, as well as the method of decision-making.
The association is a legal person as soon as it is created, i. e. at the end of the constitutive meeting. Entry in the Trade Register is optional, unless the non-profit association is engaged in a commercial activity.
Dedicates its assets to a specific purpose. The registered capital must have a minimum value of CHF 50,000.-. The foundation is created as soon as a Foundation Deed is drawn up. According to the law, a notary must publicly authenticate it to validate its creation. A foundation must be composed of a Foundation Board and an Auditing Body. Entry to the Trade Register is also mandatory. In addition, every foundation is placed under the supervision of a public law entity (Confederation, Canton or Township) to ensure that the use of the resources is linked to the purpose of the foundation.
A foundation’s structure is rigid: any change in its purpose and/or constitution can only be approved by the supervising authority.
Foundations and associations must declare their tax status. In general, both forms are taxable, except for certain tax-exempt foundations.
Thus, the choice of the legal structure is based on the available capital and the desired degree of flexibility, but also on the general organisation of the business and the number of people involved.
Which legal structure best suits my business? Let one of our specialist lawyers advise you now!