How the conversion works

The Merger Act provides a genuine change of legal form: the GmbH is not liquidated and nothing is transferred to a new company. The same legal entity continues as an AG — contracts, employment relationships, permits, IP and bank accounts stay exactly where they are, which is the whole point of the instrument.

The process is formal but well-trodden: management prepares a conversion plan and report, an audit confirmation is obtained, the members resolve on the conversion in qualified form, new articles are adopted, and the change is entered in the commercial register. Because the AG requires capital of CHF 100'000 with at least CHF 50'000 paid in, a GmbH at the minimum of CHF 20'000 will combine the conversion with a capital increase — from retained reserves if the company has them, otherwise through new contributions.

When companies typically take the step

The trigger is almost always the same set of events. An institutional financing round is approaching, and the investors expect AG shares — anonymous, freely transferable, familiar to every fund. An employee participation plan is planned, which is far easier to run on shares than on GmbH quotas. Ownership is about to broaden, and the public visibility of every GmbH member in the commercial register becomes a real drawback. Or the company is dealing internationally, where the AG label simply travels better.

If none of these applies, there is usually no urgency: the GmbH remains a perfectly good form for a stable, closely held business.

Sequencing with a financing

The practical mistake is not doing the conversion — it is doing it late. Investors routinely make the AG form a condition of closing, and a conversion negotiated in the signing week of a round adds cost, stress and avoidable dependencies to the transaction. Done early, the conversion is a calm, standalone step; done late, it sits on the critical path of your financing.

The clean sequence: agree the target structure with your investors at term-sheet stage, complete the conversion and the new articles before the round's documentation is finalized, and let the round then close into ordinary AG shares. Involve the auditor and the notary early — their confirmations are on the critical path.

What to do

  • Treat the conversion as part of financing preparation, alongside the cap table and the shareholders' agreement.
  • Check early whether the capital increase can be funded from reserves or needs fresh money.
  • If no financing is in sight, revisit the question when one is — not before.

Whether and when the conversion makes sense for your company depends on your plans; we are happy to map the sequencing with you for your specific situation.