Corporate shareholder loan

A shareholder loan, also known as a shareholder loan, is a financial transaction whereby a shareholder contributes funds to his or her company. In Switzerland, this type of loan is governed by specific regulations, and has both advantages and important considerations to take into account. Here's a detailed look at how it works.

What is a shareholder loan?

A shareholder loan is financing granted by one or more shareholders to the company in which they hold shares. Unlike a capital increase, this loan is a debt owed by the company to the shareholder, and must be repaid according to the agreed terms.

Legal framework in Switzerland

In Switzerland, shareholder loans are governed by the Swiss Code of Obligations (CO). Here are the main legal aspects to consider:

Loan agreements: The loan must be formalized by a written contract specifying the conditions (amount, interest rate, term, repayment terms).
Transparency: Transactions between shareholders and the company must be transparent and recorded in the annual accounts.
Principle of Liberality: Loans must be made under fair conditions, similar to those offered by independent third parties, to avoid any situation of favor or conflict of interest.

Terms and conditions

For a shareholder loan to be valid and advantageous, several elements must be clearly defined:

Loan amount: Determined according to the company's financial needs.
Interest rate: Can be fixed or variable. It must be in line with market rates to avoid tax problems.
Loan term: Defined according to the company's repayment capacity.
Guarantees: Possibility of securing the loan with specific guarantees, such as pledges on shares or other company assets.
Repayment terms: Specify due dates, payment frequency and early repayment conditions.

Advantages of a Shareholder Loan

Financial flexibility: Allows the company to obtain funds quickly without complex banking procedures.
Competitive interest rates: Shareholders can offer more advantageous terms than traditional financial institutions.
Equity enhancement: Improves the company's financial structure without diluting the stake of existing shareholders.

Disadvantages and risks

Conflict of interest: Requires transparent management to avoid conflicts between shareholders and the company.
Tax impact: Non-compliant interest rates may lead to tax revisions or penalties.
Financial risks: If the company defaults, repayment of the loan may be jeopardized, affecting the relationship with the shareholder.

Tax considerations

Shareholder loans in Switzerland are subject to strict tax rules:

Interest deductibility: Interest paid by the company may be tax deductible, provided it is in line with market rates.
Treatment of Dividends vs. Interest: It is crucial to correctly distinguish interest payments from dividends to avoid tax recharacterization.
Taxation of interest received: Shareholders must declare interest received as taxable income.

Implementation process

To set up a shareholder loan in Switzerland, follow these steps:

Financial Needs Assessment: Determine the amount required and the use of funds within the company.
Negotiate terms: Agree with shareholders on the terms of the loan (rate, term, guarantees).
Drawing up the Loan Agreement: Formalize the agreement in writing, including all agreed conditions.
Approval by Governance Bodies: Obtain the approval of the Board of Directors or the General Meeting of Shareholders if necessary.
Accounting: Record the loan in the company's accounts in accordance with Swiss accounting standards.
Management and follow-up: Ensure rigorous follow-up of repayments and respect the terms of the contract.

Best practices

Transparency and Documentation: Maintain clear and transparent documentation of all loan-related transactions and decisions.
Tax compliance: Ensure that loan conditions comply with tax regulations to avoid future complications.
Legal and financial advice: Consult professionals to structure the loan in the best possible way and in compliance with current legislation.
Regular evaluation: Re-evaluate the loan conditions periodically to adapt to changes in the company's financial situation.

A shareholder loan can be an effective solution to the financial needs of a company in Switzerland, offering flexibility and advantageous terms. However, it is essential to structure this type of loan with care, respecting legal and tax frameworks, and ensuring full transparency between the parties involved. By following these best practices and consulting experts, you can maximize the benefits while minimizing the associated risks.

Need personalized support?
At Prestaflex, we help you structure and optimize your shareholder loans to ensure your company's stability and growth.
Contact us today for a free consultation and find out how we can help you with your financial affairs.