Where a dividend may come from
Swiss law follows a strict balance-sheet logic. Dividends may only be paid out of the profit for the year and reserves formed for that purpose (Art. 675 CO). The share capital is untouchable, the statutory reserves (Art. 671 CO) must stay in the company, and losses carried forward are absorbed first.
The consequence founders most often underestimate is that cash in the bank is not the test. A company can hold comfortable liquidity and still have nothing to distribute because it has not yet earned it. A dividend distributes profit, not bank balance.
The reverse case matters too. A company with distributable profit but tight liquidity should not distribute either, because the board must not pay out what the company needs to meet its obligations.
The process that makes a dividend valid
A dividend is a formal act, not a transfer. The board draws up the annual accounts. Where the company is subject to audit, the auditor reports on them. The general meeting (Art. 698 CO), or the members' meeting in a GmbH, approves the accounts and resolves the distribution on the board's proposal.
In a small company this can be done in writing in short order, but it must actually be done. Withdrawals taken during the year "against future dividends" are simply debts owed to the company until a valid resolution covers them.
The danger zone near losses
As equity thins, capital loss (Art. 725a CO) and overindebtedness (Art. 725b CO) trigger duties to monitor solvency and act, which is the opposite of distributing. A dividend resolved in that zone is not just imprudent. It is the kind of decision that later ends up in a liability claim against the board that proposed it, and distributions received in bad faith have to be repaid (Art. 678 CO).
The closer the accounts are to a loss, the more the question changes from "may we?" to "why would we?".
Disguised distributions, and what to do
Distributions do not only happen by resolution. A salary well above market, the company paying private expenses, assets sold to a shareholder below value: all of these are disguised distributions, reclaimable under corporate law and unattractive in their tax consequences.
The case law is unsentimental about this. BGE 140 III 602 deals with the restitution of board remuneration clearly out of proportion to the work done and to the company's position, and BGE 140 III 533 with restitution claims alongside liability claims, intra-group loans and what may actually be distributed.
The clean pattern is simple. Market-rate compensation for work, shareholder transactions at arm's length and documented, and profit distributed once a year on the basis of approved accounts. If the balance sheet is anywhere near a loss, take advice before resolving anything, and for your specific distribution question we are happy to look at the numbers with you.
This is general information, not legal advice. How it applies to your situation depends on the facts, if in doubt, ask.
