Director’s Duties and Corporate Governance in Switzerland

The Director’s Duties

Director’s duties and corporate governance in Switzerland is a complex subject. Directors of a company have several legal duties and responsibilities, which include the following:

Duty of loyalty: Directors are required to act in the best interests of the company and to avoid any conflicts of interest. This includes not taking advantage of their position to benefit themselves or others at the expense of the company.[1] Duty of care: Directors are required to exercise reasonable care and skill in managing the company and making decisions on behalf of the company. This means that they must be informed about the company’s activities and financial performance, and must act in a responsible and prudent manner.[2] Duty of supervision: Directors are responsible for supervising the management of the company and ensuring that the company’s activities are conducted in a lawful and appropriate manner.[3] Duty of transparency: Directors are responsible for ensuring that the company is transparent in its dealings and that effective communication channels are in place to keep shareholders and other stakeholders informed.[4] Duty of compliance: Directors are responsible for ensuring that the company complies with all relevant laws and regulations, including those related to corporate governance, money laundering, and tax compliance.[5]

Corporate Governance

It’s important to note that the legal framework for directors’ duties and responsibilities may vary depending on the type of company and its legal form and the laws applicable to it. And also it’s important that directors should have proper knowledge of the company’s activities and to keep themselves informed about the company’s financial situation, in order to fulfill their responsibilities.[6]

Corporate governance in Switzerland is governed by a combination of laws, regulations, and codes of best practice. The legal framework for corporate governance in Switzerland is based on the Swiss Code of Obligations, the Swiss Stock Exchange Act, and the Swiss Ordinance on Corporate Governance.[7]

In Switzerland, companies are generally managed by a board of directors, which is responsible for the overall direction and supervision of the company. The board of directors is elected by the shareholders and is accountable to them. Shareholders have the right to vote on important matters such as the election of the board of directors, the approval of the annual financial statements, and major transactions such as mergers and acquisitions.[8]

Swiss corporate governance also includes a system of control and oversight by the company’s auditors. Auditors are responsible for ensuring that the company’s financial statements are accurate and that the company is in compliance with all relevant laws and regulations.[9]

The Swiss Code of Best Practice for Corporate Governance, which is a set of guidelines for good corporate governance practices, is also an important aspect of corporate governance in Switzerland. This code provides recommendations for the organization and operation of the board of directors, the management of the company, and the rights and responsibilities of shareholders.[10]

Additionally, Swiss law also provides for the protection of minority shareholders, as well as the rights of shareholders to participate in the general meeting, and to propose items to the agenda.[11]

Overall, the Swiss corporate governance system aims to ensure the efficient and transparent management of companies, the protection of shareholders’ rights, and the maintenance of high standards of corporate ethics.

Corporate Governance Checklist

  • Comply with legal and regulatory requirements: Ensure that the company is in compliance with all relevant laws and regulations, including those related to corporate governance, money laundering, and tax compliance.[12]
  • Avoid conflicts of interest: Identify and manage any potential conflicts of interest that may arise, and take appropriate measures to avoid them.[13]
  • Exercise duty of care: Stay informed about the company’s activities and financial performance, and exercise reasonable care and skill in making decisions on behalf of the company.[14]
  • Supervise management: Ensure that the management of the company is being conducted in a lawful and appropriate manner.[15]
  • Ensure transparency: Ensure that the company is transparent in its dealings and that effective communication channels are in place to keep shareholders and other stakeholders informed.[16]
  • Fulfill compliance responsibilities: Ensure that the company is compliant with all relevant laws and regulations.[17]

In conclusion, Swiss law imposes several legal duties and responsibilities on directors of a company, including the duty of loyalty, the duty of care, the duty of supervision, the duty of transparency, and the duty of compliance. Corporate governance in Switzerland is governed by a combination of laws, regulations, and codes of best practice, including the Swiss Code of Obligations, the Swiss Stock Exchange Act, and the Swiss Corporate Governance Ordinance. Additionally, the Swiss Code of Best Practice for Corporate Governance provides guidelines for good corporate governance practices. Overall, the Swiss corporate governance system aims to ensure the efficient and transparent management of companies, the protection of shareholders’ rights, and the maintenance of high standards of corporate ethics.

 

[1] Swiss Code of Obligations, Art. 728

[2] Swiss Code of Obligations, Art. 729

[3] Swiss Code of Obligations, Art. 731

[4] Swiss Stock Exchange Act, Art. 652a

[5] Swiss Corporate Governance Ordinance, Art. 3

[6] Swiss Corporate Governance Ordinance, Art. 7

[7] Swiss Code of Obligations, Swiss Stock Exchange Act; and Swiss Corporate Governance Ordinance.

[8] Swiss Code of Obligations, Art. 717

[9] Swiss Corporate Governance Ordinance, Art. 10

[10] Swiss Code of Best Practice for Corporate Governance

[11] Swiss Code of Obligations, Art. 697

[12] Swiss Corporate Governance Ordinance, Art. 3

[13] Swiss Code of Obligations, Art. 728

[14] Swiss Code of Obligations, Art. 729

[15] Swiss Code of Obligations, Art. 731

[16] Swiss Stock Exchange Act, Art. 652a

[17] Swiss Corporate Governance Ordinance, Art. 3