A reasonable time period for paying a dividend is 1-2 weeks.
No, there are no timing restrictions on paying dividends. It is permissible to resolve and pay several dividends in one business year but if the dividend is resolved upon later than six months following the end of the business year, interim financial statements are required or, if the company is audited, a confirmation from the auditor that the dividend proposition complies with statutory law and the company's articles of incorporation.
The distribution of profits generated during the business year (interim dividend) is not permitted. However, such dividends will be permitted by the new corporate law that will most probably enter into force by the end of 2021 or at the beginning of 2022.
The accounts required to support payment of a dividend include financial statements prepared in accordance with Swiss corporate law. These financial statements will have to be approved by the annual shareholders meeting. If a company has appointed statutory auditors, the accounts will also have to be audited. Note that the auditors' report must include the confirmation that the dividend proposition complies with the law and the articles of incorporation of the company. In case of a dividend resolved at an extraordinary shareholders meeting (extraordinary dividend payments), such auditor confirmation has to be provided separately.
Yes, there are restrictions on the amount of dividends that can be paid.
Under Swiss law, only the so-called distributable equity may be used for dividend payments. Distributable equity is calculated by taking total equity and subtracting the nominal share capital as well as legal capital reserves and legal available earnings blocked for distribution. Legal reserves are generally blocked to the extent they do not exceed 50% (holding companies: 20%) of the share capital. In addition reserves that are generally not available for a distribution also have to be subtracted (reserve for treasury shares, revaluation reserve, statutory reserves where applicable).
The articles of incorporation of a company may increase these reserve requirements thereby reducing the amount of distributable equity.
In addition, intercompany claims that are not considered at arm's length also reduce the freely distributable equity.
Yes, it is possible to increase reserves either by means of profits generated or by means of additional capital contributions.
No regulatory approvals are required in connection with payment of a dividend. However, the necessary tax filings have to be made following the distribution of a dividend.
No, there are no foreign exchange requirements on paying dividends to foreign parent companies. A dividend can be paid out in CHF or any foreign currency.
Any dividend that is not paid or valued in CHF, however, will have to be converted into CHF using a foreign exchange rate applicable when the dividend is resolved or distributed. For tax reasons, it might be recommendable to use the exchange rate published by the Swiss Federal Tax Administration.
Yes, this is possible as long as the company has sufficient distributable equity in the amount of the dividend.
Yes, the dividend must be resolved based on year-end financial statements within a time period of 6 months.
Thereafter, interim financial statements are required or, if the company is audited, a confirmation from the auditor that the dividend proposition complies with statutory law and the company's articles of incorporation. This additional requirement in case of a dividend distribution following the six months period is in practice time consuming.
Yes, there are restrictions on lending funds intra-group but cross-border (not restricted to cross border lending). If these intragroup loans are not made at arm's length conditions, they must not exceed the freely distributable equity of the company. Whether intragroup loan are made at arm's length has to be determined on a case by case basis. Therefore, it is recommendable that the intragroup loans do never exceed the freely distributable equity of the company.
Note, however, that intergroup loans that are not at arm's length may be qualified from a tax perspective as a hidden dividend distribution or subject to withholding tax. With regard to the interest rates, the SFTA publishes Safe Harbour Rules on a yearly basis. Thin-cap rules should be observed.