Managing a Swiss LLC: duties, signing powers and personal liability

Member, manager, signatory or employee?

In a small company, the same founder often provides capital, runs the business and signs contracts. Those functions remain legally distinct. A Swiss LLC is a Sàrl in French and a GmbH in German; its statutory manager is a gérant or Geschäftsführer.

By default, members manage the LLC collectively unless the articles provide otherwise. An external manager can therefore be appointed. An SA/AG instead has a board of directors, with its own rules. Do not interchange the official roles merely because everyday English uses “director” broadly.

The wider framework is explained in our article on forming and operating a Swiss LLC.

What must management actually monitor?

The role is more than signing papers prepared by an accountant. Managers need to understand the company’s position and make the required decisions.

Overall direction, organisation, accounting and financial controls, supervision of delegated management and preparation of members’ decisions are core responsibilities. Certain powers are non-transferable; outsourcing work does not remove oversight duties.

Ask for a practical management file containing:

• Available cash and upcoming payment dates.
• Customer receivables, supplier balances and overdue amounts.
• Payroll, social-insurance, VAT and tax status.
• Periodic accounts and explanations of significant variances.
• Major contracts, disputes and off-balance-sheet commitments.

Regular reporting enables action before the annual accounts are closed. The appropriate frequency depends on the activity; cash pressure requires closer monitoring.

Swiss-resident representation and signing authority

The LLC must be capable of being represented by a person resident in Switzerland. This can be a statutory manager or an executive officer. It does not mean every manager must live in Switzerland. A commercial registered-office address alone does not satisfy the representation requirement.

Where signatures are joint, check the combination of authorised signatories. Simply seeing a Swiss-resident name on the extract is not enough to resolve every situation: the arrangement must genuinely enable representation from Switzerland.

Individual or joint signature

Individual signature lets a person bind the company alone. Joint signature requires the combination recorded in the register, commonly two signatures. A spending limit in an internal policy does not necessarily have the same effect against third parties.

Example: two Geneva founders want every loan approved by both. Align their shareholders’ agreement, internal rules, bank permissions and registered signing powers. An informal email does not establish the same framework.

When can personal liability arise?

The LLC normally answers for its debts with all its assets. Creditors are not limited to recovering the nominal CHF 20,000 capital: additional cash and property also belong to the company’s asset base.

A manager is not automatically personally liable for every unpaid invoice. Personal liability can arise from a culpable breach of duties causing damage, or from a separate commitment such as a personal bank guarantee.

For AVS/AHV contributions, Article 52 of the social-insurance legislation provides for subsidiary liability of a legal entity’s governing officers when the conditions are met, including intentional or grossly negligent breach causing loss. That does not mean every manager is automatically liable for all tax and social-insurance debts.

Transactions involving the manager, relatives or their own business require attention to market terms, the company’s interest, disclosure and documented conflicts. Reliable payroll and social-insurance administration helps make outstanding duties visible.

Act promptly when cash becomes tight

A cash shortage, capital loss and over-indebtedness are different situations. Establish reliable figures quickly and assess the relevant measures and legal duties.

• Update realistic expected receipts and due payments.
• Identify overdue debts and approaching commitments.
• Prepare necessary accounts and review going-concern assumptions.
• Document financing and restructuring decisions.
• Obtain prompt advice on over-indebtedness obligations.

Waiting for the next annual meeting or a hypothetical customer can increase losses. The Code of Obligations requires intervention and, in specified circumstances, notification of the court. A mere promise to provide money is not sufficient to disregard those duties.

Minutes should record what was examined, decided and followed up. They do not replace action. Regular company accounting support provides the figures needed to make decisions.

The tests for capital loss and over-indebtedness determine which accounts, measures and notifications may be required. Assess them separately from a short-term cash shortage.

Can an LLC manager claim unemployment benefits?

A salaried manager usually pays unemployment-insurance contributions on salary. However, retaining decisive influence over the business can prevent benefit entitlement because the person remains in an employer-like position.

Distinguish unemployment benefits after job loss from short-time work compensation. Article 31 of the Unemployment Insurance Act concerns the latter; the rules and case law concerning controlling officers also affect unemployment claims.

Contributions do not guarantee entitlement, but having once been a manager does not permanently exclude everyone either. A genuine, definitive departure can change the assessment, subject to the other conditions. The insurance fund considers the actual role, ownership and powers retained.

Ask the competent fund to assess the position before arranging an exit. Ending employment while remaining the effective manager is not necessarily equivalent to leaving the company completely.

Checklist before accepting or leaving office

Before appointment, obtain the commercial-register extract, articles of association, latest accounts, tax and social-insurance position, major contracts and details of disputes. Confirm that you have the information, time and resources needed to perform the role.

• Allocate responsibilities in writing.
• Arrange regular meetings and records of decisions.
• Set a process for disagreements and conflicts of interest.
• Monitor delegated duties and signing powers.
• Review directors’ and officers’ liability insurance, including exclusions.

On departure, formally document the decision, hand over the files and update the commercial register and access rights. Deregistration does not erase potential liability for the earlier period.

Document payroll and benefits consistently so the company can explain its declarations during an AVS employer audit.

Frequently asked questions