New Corporate Governance Rules For Swiss Public Companies

Author:Mr Lucas Hänni and Alexander Nikitine
Profession:Walder Wyss Ltd

On 3 March 2013, the Swiss electorate approved the Minder Initiative, which will fundamentally change the legal framework on executive compensation and other corporate governance matters for Swiss public companies. The implementation of the Minder Initiative will be the task of the Federal Council and the Swiss Parliament. While many aspects around such implementation will remain unclear for the months and years to come, the new rules will definitely require substantial changes to the Articles and other company documents.

Requirements of Minder Initiative - New Paragraph 3 of Article 95 of Swiss Federal Constitution

According to the Minder Initiative, intro-ducing a new paragraph 3 of article 95 of the Swiss Federal Constitution («FC»), Swiss (and only Swiss) companies whose equity securities are listed on a Swiss or foreign stock exchange need to brace themselves for the following key changes:


The general meeting of shareholders («GM») shall vote on the aggregate compensation amount of the Board, the executive management and the ad-visory board (Beirat). Such vote is man-datory and binding. Severance or «other» compensation payments, ad-vance payments, transaction incen-tive payments to members of the Board or the executive management are prohibited. Additional consulting or em-ployment agreements with such members are no longer permitted either.

New Election Procedures

The GM shall elect the chairman of the Board, and, individually, each Board member as well as each member of the compensation committee. The GM shall further elect the independent proxy (unabhängiger Stimmrechtsvertreter). Representation by the corporate proxy (Organvertreter) or the depositary proxy (Depotstimmrechtsvertreter) shall no longer be permitted. Electronic voting by shareholders shall be allowed. Pension funds must cast their votes in the interest of the insured and disclose how they voted.

Additional Specific Rules in the Articles

The Articles shall include specific compensation rules, in each case cover-ing both the members of the Board and the executive management, concern-ing the following items: (i) the amount of loans, credit facilities and post-retire-ment benefits; (ii) bonus schemes and compensation plans; and (iii) number of mandates outside the group. The du-ration of employment agreements with the executive management needs to be addressed in the Articles as well.

Criminal Sanctions

Any violation of the new rules shall be sanctioned with...

To continue reading