The Legal Framework of Companies with Limited Liability in Liechtenstein

Josef Bergt
2023

In the Principality of Liechtenstein, the establishment and management of companies with limited liability (in German ‘Gesellschaft mit beschränkter Haftung’ or ‘GmbH’) are governed by a set of comprehensive regulations, as outlined in Article 389 to Article 427 of the Liechtenstein Persons and Companies Act (PGR). This article aims to provide an overview of these provisions.

A company with limited liability (GmbH) is a legal entity that can be established by one or more persons, companies, or private or public law associations for any purpose. It has its own name and a predetermined capital (nominal capital). It is mandatory for the company with limited liability to be entered in the Commercial Register.

To set up a company with limited liability, one founder is sufficient. Founders may be natural persons or legal entities, irrespective of their place of residence or registered domicile. The founding of a company with limited liability requires a public deed. Under certain circumstances, the company with limited liability may also be set up in a simplified procedure without a public deed.

The supreme organ of the company with limited liability is the general meeting of company members. It has the power to establish the annual balance sheet and distribute the resulting net profit in accordance with the statutory provisions and the articles, among other responsibilities.

All company members are jointly responsible for the management and representation of the company with limited liability, unless the articles stipulate otherwise. The power of management and representation may be transferred to one or more company members or third parties by the articles or by means of a company members' resolution.

The nominal capital of a company with limited liability must be at least CHF, EUR or USD 10’000.00. The nominal capital must be fully paid up or contributed at the time of incorporation. In terms of liability and responsibility, the company with limited liability is liable for its obligations with its entire assets. The company members are not personally liable. The managing directors are liable to the company, the individual company members, and the creditors of the company for the damage they cause through intentional or negligent breach of their duties.

Under certain circumstances, the company with limited liability may also be set up in a simplified procedure without a public deed. This is known as the model protocol for the simplified set‐up procedure.

The assignment of a share in the company shall only be effective if it has been notified to the partners and entered in the share register. Unless the articles provide otherwise, this entry may only be made if three-fourths of all the participants, who at the same time represent three-fourths of the share capital, have given their consent, unless the assignment is made to other shareholders. The articles of association may provide that the assignment may be made without the consent of the members, or that it may be further restricted, such as by the right of first refusal of the members, the consent of the administration or the like. The assignment of a share in the company, as well as the obligation to make such an assignment, but not the creation of a limited right in rem, shall require public authentication (e.g., by notary public) in order to be valid.

An auditor must in general be appointed for a company with limited liability. The auditor is elected by the general meeting of company members and must fulfil the statutory requirements. Under certain conditions, a review and thus the appointment of an audit authority may be waived.

In addition, a representative must also be appointed, insofar as no domestic service address is designated. The representative is authorised to receive declarations, communications and notifications and to represent the legal entity in dealings with public authorities.

The company with limited liability is subject to the regulations concerning account rendering and disclosure obligations. The annual financial statements and the annual report must be disclosed by being deposited with the Office of Justice for public inspection. The annual financial statements and the annual report must be disclosed within six months of the end of the financial year.

Source: Factsheet AJU/ h70.007e.02

Executive Summary:

• A company with limited liability (GmbH) is a legal entity that can be established by one or more persons, companies, or private or public law associations for any purpose.
• To set up a company with limited liability, one founder is sufficient. Founders may be natural persons or legal entities, irrespective of their place of residence or registered domicile.
• The supreme organ of the company with limited liability is the general meeting of company members.
• All company members are jointly responsible for the management and representation of the company with limited liability, unless the articles stipulate otherwise.
• An audit authority must be appointed for a company with limited liability.
• A representative must also be appointed, insofar as no domestic service address is designated. The representative is authorised to receive declarations, communications and notifications and to represent the legal entity in dealings with public authorities.
• The nominal capital of a company with limited liability must be at least CHF/USD/EUR 10’000.00. Capital contributions can be made in cash or in kind.
• In terms of liability and responsibility, the company with limited liability is liable for its obligations with its entire assets.
• The company with limited liability is subject to the regulations concerning account rendering and disclosure obligations.
• Under certain circumstances, the company with limited liability may also be set up in a simplified procedure without a public deed.
• The assignment of a share in the company shall only be valid shall if it has been publicly authenticated (e.g., by notary public).