In Switzerland, equity (capital propre or Eigenkapital) is governed by the CO and comprises paid-in share capital, general legal reserve, capital contribution reserves (RAP), voluntary reserves and retained earnings. Swiss CO accounting is characterised by the prudence principle, allowing hidden reserves and conservative asset valuation — meaning statutory equity may significantly understate economic equity. The CO also prescribes specific minimum equity levels and triggers mandatory measures when equity is critically eroded (CO art. 725). In valuation and due diligence, understanding the composition and distributable portion of Swiss equity is essential for structuring post-acquisition distributions.

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Example: a Swiss SA presents statutory equity of CHF 5.2 million in CO accounts. Economic restatement reveals real estate undervalued by CHF 1.8 million and machinery with hidden reserves of CHF 600,000 — bringing economic equity to CHF 7.6 million. Of the CHF 5.2 million statutory equity, CHF 3.5 million consists of capital contribution reserves (RAP) distributable without withholding tax, an important consideration for the acquirer's post-acquisition cash extraction strategy.

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Hectelion analyses Swiss equity composition — particularly RAP reserves and distributable amounts — as part of every Swiss acquisition structuring advisory.