Distributable profit (Switzerland)

Distributable profit (bénéfice distribuable) in Switzerland is the portion of a company's net profit that may legally be distributed to shareholders as a dividend. Under CO art. 675, only profit appearing in the approved annual accounts — after allocation to mandatory legal reserves — is available for distribution. Swiss law requires allocation of 5% of annual profit to the general legal reserve until it reaches 20% of paid-in share capital, limiting distributions in early-growth companies. Understanding distributable profit is key in business valuation and acquisition structuring, as it determines the capacity to repatriate value post-acquisition through dividends.

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Example: a Swiss SA generates CHF 1.2 million net profit. After mandatory allocation of CHF 60,000 (5%) to the general legal reserve and a loss carryforward offset of CHF 80,000, distributable profit amounts to CHF 1.06 million. The board proposes a dividend of CHF 800,000, retaining CHF 260,000 as voluntary reserve — a distribution policy assessment relevant to post-acquisition cash extraction modelling.

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Hectelion analyses distributable profit and dividend capacity as key value drivers in Swiss acquisition structuring and financial due diligence.