What is a stock corporation (AG)?
According to the Swiss Code of Obligations, a public limited company (AG) is“a company with its own name whose capital (share capital) is divided into partial amounts (shares) and for whose liabilities only the company’s assets are liable“. It is comparable to a company in the USA, which bears the designation Inc. or Corporation, or a Public Limited Company (PLC) in the United Kingdom (UK). The use of the abbreviation AG after the name (company) of a company is mandatory and communicates to investors and anyone who has dealings with the company that it is a public limited company.
How a stock corporation (AG) works
An AG refers to a company that issuesshares. The buyers, owners and holders of these shares have limited liability. This means that, as a rule, they cannot be held personally liable for business losses. The maximum risk of loss, e.g. in the event of bankruptcy, is normally limited to the amount they paid for the shares. In most cases, so-called public companies whose shares are traded on the stock exchange are well known. However, the majority of public limited companies are not listed on the stock exchange.
Information requirements for listed stock corporations (AG)
Public companies whose shares are listed on the stock exchange have more extensive information and disclosure requirements than companies not listed on thestock exchange. In particular, the aim is to close the information gap between management and shareholders and other stakeholders. Investor protection is an important aspect. Investors and investment experts should have the opportunity to obtain information about the course of business. Public limited companies are therefore obliged to publish regular reports to shareholders and potential shareholders on their actual financial health. Listed companies, for example, must publish annual audited financial statements , including an independent auditor’s report. This must be published no later than four months after the annual financial statements. In addition, a semi-annual report must be published, which does not have to be audited, but must in principle meet the same requirements as the annual report. The semi-annual report must be published within three months of the closing date of the interim financial statements.
Advantages and disadvantages of a stock corporation (AG)
A major advantage of founding a public limited company (AG) is that it offers the opportunity to raise capital by issuing shares. A listing on a publicstock exchange also attracts additional attention from other market participants such as private investors, professional traders and investment funds. This in turn generally leads to better access to capital for investment in the company than with a privately held stock corporation.
On the other hand, listed companies are much more strictly regulated. They must hold general meetings that are open to public shareholders and are obliged to meet higher standards of transparency in their financial reporting (see also Information requirements for listed companies). As they are publicly tradable, they are also susceptible to pressure from activist shareholders and can be the target of takeover bids by competitors.