1. Introductory
1.1 Forms of Corporate/Business Organisations
The principal forms of corporate organisations in Switzerland are the stock corporation (Aktiengesellschaft (AG)) and the limited liability company (Gesellschaft mit beschränkter Haftung (GmbH) or LLC). The stock corporation is the most important company form; it is suitable for all sizes and types of business and is the only company form that can be listed on a stock exchange. Both the AG and LLC feature a separate legal personality, a predetermined capital divided into shares or quotas and a limitation of liability to their own assets.
1.2 Sources of Corporate Governance Requirements
Primary Sources
The primary sources of law relating to corporate governance are the Swiss Federal Code of Obligations (CO) (namely the Swiss company law in Article 620 et seq. CO) and, for listed corporations, the Swiss Federal Act on Financial Market Infrastructure and Market Conduct in Securities and Derivatives Trading (the "Financial Market Infrastructure Act" or FinMIA)
Swiss Company Law
Swiss company law has undergone a comprehensive revision, which came into force on 1 January 2023 (for an overview of various relevant new provisions, see 2.1 Hot Topics in Corporate Governance).
FinMIA
The FinMIA regulates the organisation and operation of financial market infrastructure and the conduct of financial market participants in securities and derivatives trading.
The FinMIA is further specified by three ordinances on stock exchanges and securities trading:
- the Financial Market Infrastructure Ordinance (FinMIO) is issued by the Swiss government (Federal Council) directly;
- the FINMA Financial Market Infrastructure Ordinance (FinMIO-FINMA) is issued by the Swiss Financial Market Supervisory Authority (FINMA); and
- the Takeover Ordinance (TOO) regulating public takeovers is issued by the Swiss Takeover Board (TOB).
In addition to the issuance of ordinances in its field of competence, the regulatory body FINMA also has the authority to issue directives (circulars). The following are relevant:
- the FINMA circular "Remuneration schedules" (2010/01, as amended 4 November 2020), addressing the minimum standards for remuneration schemes of financial institutions; and
- the circulars "Corporate Governance – insurers" (2017/02, of 1 January 2017) and "Corporate Governance – banks" (2017/01, as amended 4 November 2020), both addressing corporate governance, risk management and the internal control system at insurance companies and banking institutions, respectively.
Listing Rules
The two Swiss stock exchanges, SIX Swiss Exchange AG (SIX) and the smaller BX Swiss AG (BX), both self-regulatory organisations under the FinMIA, have issued listing rules with specific reporting and disclosure requirements, partially amended by the new Financial Services Act (FinSA) as of 1 August 2021. Further, to improve transparency on corporate governance, SIX Exchange Regulation, the regulatory division of SIX, has enacted the "Directive on Information Relating to Corporate Governance" ("SIX Directive Corporate Governance"), as last amended on 1 January 2023. It requires issuers with a main Swiss listing to disclose, in a separate chapter of their annual report, important information on the management and control mechanisms at the highest corporate level, or to give valid reasons for not doing so ("comply or explain").
In addition, the SIX "Directive on the Disclosure of Management Transactions", as amended on 1 February 2024, requires issuers with a main Swiss listing and (indirectly) their members of the board of directors and of the executive management, to disclose and report transactions of the members of the board of directors and of the executive management in their respective securities.
Furthermore, the revised Swiss company law provides for a statutory say-on-pay regime applicable to the remuneration of the members of the board of directors, executive management and advisory board (if any) of public Swiss companies – ie, stock corporations incorporated under Swiss company law whose shares are listed, either on a stock exchange in Switzerland or abroad. The statutory provisions do not apply, in particular, to Swiss companies that have solely listed debt securities or non-voting participation certificates outstanding, and, in general, not to any privately held companies.
Corporate Governance Standards
The Swiss Code of Best Practice for Corporate Governance, as amended on 6 February 2023 (SCBP), issued by economiesuisse, Switzerland's leading business association, following the entry into force of the revised Swiss company law, establishes corporate governance standards in the form of non-binding recommendations ("comply or explain"). The SCBP primarily addresses Swiss public companies, but also serves as a guideline for non-listed Swiss companies and organisations of economic significance. Being an effective instrument of selfregulation, it structures, integrates and reflects various Swiss law provisions on corporate governance and accepted corporate practice and sets corporate governance standards. While classified as soft law, the SCBP is widely recognised and observed by many companies in Switzerland (see 2.1 Hot Topics in Corporate Governance).
Guidelines for Institutional Investors
An important group of representatives of Swiss institutional investors (such as the Swiss Association of Pension Fund Providers and the Federal Social Security Funds), Swiss businesses (including the Swiss Business Federation economiesuisse) and proxy advisers (Ethos) have issued the "Guidelines for institutional investors governing the exercising of participation rights in public limited companies". Unlike the SCBP, which primarily targets listed companies, these non-binding guidelines are directed at institutional investors. They aim at strengthening good corporate governance by outlining best practices for exercising participation rights in Swisslisted companies. The Guidelines' importance increased when Swiss pension funds became legally required to exercise their voting rights and disclose their voting decisions (today in accordance with the Federal Act on Occupational Old Age, Survivors' and Invalidity Pension Provision (OPA)).
1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares
Companies with publicly traded shares have to comply with additional corporate governance requirements. In particular, the election and remuneration of the board of directors is more strictly regulated. The chairperson, as well as each member of the board of directors, the members of the compensation committee, and the independent proxy, have to be appointed individually and annually by the shareholders' meeting.
The board's proposal on the compensation for the board of directors and for the executive management (and, if any, of an advisory board) has to be submitted annually to the shareholders for a binding vote (binding say-on-pay).
Additionally, the Listing Rules of the SIX and BX establish specific reporting and disclosure requirements and, finally, the SIX Directive Corporate Governance requires SIX-listed companies to disclose key information on the management and control mechanisms at the highest corporate level in their annual business reports – or provide valid reasons for not doing so ("comply or explain").
2. Corporate Governance Context
2.1 Hot Topics in Corporate Governance
In 2024, the adaptation to the revised Swiss company law, which came into force on 1 January 2023, and the implementation of the new features of the new law into Swiss companies' articles of association remained an important topic.
As a reminder, the revised Swiss company law introduced several key changes and governance features, such as the possibility of holding virtual and hybrid shareholder meetings (see 5.3 Shareholder Meetings) or the introduction of a capital band. Also, the existing mandatory say-on-pay regime for listed companies was transformed into statutory company law.
Another hot topic in 2024 was the first reporting period pursuant to the new ESG/non-financial reporting and due diligence duties introduced in the CO (discussed in 2.2 ESG Considerations). While these rules were implemented in alignment with EU regulations, the European Union itself has further developed its respective regulatory framework by adopting the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). In general, the Swiss rules are currently less strict and less far-reaching than the rules in the CSRD and CSDDD. The Swiss government has started its consideration on aligning future ESG regulation with the new EU regulation. However, very recently, both in the EU and in Switzerland, the further development of the respective rules has slowed down significantly. The European Commission has adopted new proposals, so-called Omnibus packages, that intend to simplify EU rules for citizens and business. The measures shall focus the sustainability reporting obligations on the largest companies and shall make sure they do not burden smaller companies.
Lastly, in 2024, the European Court of Human Rights (ECtHR) issued a landmark judgment in Verein Klimaseniorinnen Schweiz and Others v Switzerland, which requests Switzerland to adopt more effective climate measures and meet its reduction targets. Whether, however, this decision will have a palpable impact on Swiss legislation is not seen as very probable.
2.2 ESG Considerations
According to the Swiss Corporate Social Responsibility Action Plan, the Swiss government's approach focuses on:
- sensitising domestic companies to ESG;
- offering support to companies seeking to address relevant issues;
- promoting transparency; and
- establishing a best practice based on international standards.
At the same time, recent ESG-related legislative changes have been introduced, aligning with international legislative developments.
Gender Representation on the Board of Directors and in the Executive Management
Swiss-listed companies exceeding two of the following thresholds in two consecutive financial years – a balance sheet total of CHF20 million, sales revenue of CHF40 million, and/or 250 fulltime positions on annual average – are required to implement certain gender quotas for the board of directors (at least 30% of each gender) and the executive management (at least 20% of each gender) under "comply or explain" concept (Article 734f CO).
The threshold is calculated at group level. Any company that fails to meet the mentioned requirements must disclose the reasons for missing the quotas in its remuneration report, along with the actions that are being taken to improve the situation. Privately held stock corporations may voluntarily adhere to the gender quotas (opt-in). The quotas are subject to multiyear conformance periods (2026 for boards of directors and 2031 for executive managements) but in practice significant changes in the composition of boards and senior managements are already underway.
Disclosure Obligations Relating to Raw Material Companies The provisions regardi
material companies have been in force since 1 January 2021, and require major companies (ie, those which have to undergo an ordinary audit by law) to issue an annual report on payments made to state bodies, provided they are engaged, either directly or through a controlled entity, in the extraction of minerals, oil or natural gas, or in the harvesting of timber in primary forests (Articles 964d–964i CO).
Non-Financial Reporting Obligations
As of 1 January 2022, the Swiss Parliament implemented new rules regarding "transparency on non-financial matters" encompassing new respective reporting obligations for non-financial matters (Articles 964a–964c CO).
The reporting obligations apply to Swiss "companies of public interest" ie, Swiss-listed companies and certain FINMA-supervised financial institutions – if they meet certain thresholds on annual average in two successive financial years:
- regarding the number of employees (at least 500 FTE); and
- with either a balance sheet total exceeding CHF20 million or revenues exceeding CHF40 million.
If within scope, the respective companies have to report on the risks of their business activities in the areas of the environment (in particular, CO₂ targets), social concerns, labour concerns, human rights and the fight against corruption, as well as on the measures taken against these risks. Violations of these reporting duties are punishable by criminal sanctions (fines). The rules are largely based on known international provisions, such as Directive 2014/95/EU (the "Non-Financial Reporting Directive") concerning non-financial reporting.
The first report for non-financial matters was required to be published in 2024 for the financial year 2023.
In this context, and in light of the EU's revised Corporate Sustainability Reporting Directive (CSRD) (Directive (EU) 2022/2464), the Swiss Federal Council has identified a need to adapt the recently introduced Swiss regulation. As a result, the Federal Council opened the consultation on new provisions regarding corporate sustainability reporting obligations. Based on the developments in the EU, this revision project has meanwhile slowed down (see 2.1 Hot Topics in Corporate Governance).
In order to further specify the environmental aspects of the reporting obligations on nonfinancial matters, on 23 November 2023, the Swiss Federal Council adopted the Implementing Ordinance on Climate Disclosures, which entered into force on 1 January 2024. The Ordinance provides for the mandatory implementation of the internationally recognised recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Qualifying Swiss companies must report on:
- the financial risk that a company incurs through climate-related activities; and
- the impact of the company's business activities on the climate and the environment.
This so-called double materiality perspective also corresponds to the approach of the EU.
Due Diligence and Disclosure Obligations Regarding Minerals and Metals from ConflictAffected Areas and Child Labour Companies whose registered office, head office or principal place of business is in Switzerland and whose business involves so-called conflict minerals or that offer products/services that are prone to child labour must further comply with special and far-reaching due diligence and reporting obligations (Articles 964j–964l CO). In particular, the due diligence and reporting obligations in the supply chain arise if a company:
- imports minerals or specific metals containing tin, tantalum, tungsten or gold from conflictaffected and high-risk areas into or processes them in Switzerland; or
- offers products and services in relation to which there is a reasonable suspicion that they have been manufactured or provided using child labour.
In these cases, companies are obliged to set up an adequate management system and stipulate their supply chain policy and a system by which the supply chain can be traced, in order to identify and assess the risks of harmful impacts in their supply chain. In addition, these companies must draw up a risk management plan and take measures to minimise the risks identified. The report on the company's compliance with the due diligence obligations must be approved and signed by the board of directors. The board of directors must ensure that the report is published electronically immediately after approval and remains publicly available for at least ten years.
The Federal Council has additionally issued an Implementing Ordinance on Due Diligence and Transparency for Minerals and Metals from Conflict-affected Areas and Child Labour (DDTrO), which also entered into force on 1 January 2022.
Reporting Obligations on Wage Inequality
In July 2020, the Federal Act on Gender Equality was modified to include reporting obligations on wage inequality. In broad terms, companies with 100 or more employees will be required to complete an equal-pay analysis every four years. The analysis must be audited by an independent, approved third party. The results of the analysis must be shared with the workforce and, if the company is listed, with its shareholders (in the appendix to the annual report).
Private Sector ESG Disclosure Directives and Initiatives
There are several initiatives from the private sector, such as from the Swiss Bankers Association, which has declared sustainable finance as one of its strategic priorities. Among other things, this led to the development of guidelines for the advisory process for private clients. In addition, certain Swiss proxy advisors have developed corporate governance and responsibility guidelines in connection with their voting guidelines.
3. Management of the Company
3.1 Bodies or Functions Involved in Governance and Management
In a Swiss stock corporation, three bodies are involved in the governance and management:
- the shareholders' meeting;
- the board of directors; and
- the statutory auditors.
Shareholders' Meeting
The shareholders' meeting is the supreme body. It decides the fundamental organisation of the company, elects the board of directors and takes the fundamental decisions.
Board of Directors
The board of directors is the executive body. Swiss company law provides that the board may pass resolutions on all matters not reserved by law or the articles of association to the shareholders' meeting and shall manage the business of the company to the extent it has not delegated such management to individual members or to an executive management in accordance with organisational regulations.
Statutory Auditors
The statutory auditor is a controlling body, elected by the shareholders' meeting. However, in small companies with less than ten full-time employees, shareholders may unanimously decide not to appoint an auditor. The scope of an auditor's duties depends on the nature and size of the enterprise; listed, large and mid-sized corporations are subject to an ordinary audit, while smaller corporations may be subject to a more limited financial audit only.
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Originally Published by Chambers And Partners
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