One of the aims of the company law reforms is to implement the requirements that passed into the Federal Constitution following the adoption of the popular initiative ’Against Fat-Cat Salaries’ in March 2013. The Federal Council also wishes to introduce gender representation guidelines for major listed companies and transparency requirements for companies in the extractive industries. It also plans to make the rules on establishing companies and on capital more flexible. Based on the key elements that have been determined, the Federal Council will now draft its dispatch, which is likely to be submitted to Parliament towards the end of 2016. In determining the key elements, the Federal Council has taken account of the outcomes of the consultation process, including the various concerns raised, in particular by the business community.
Shareholders to be given greater rights on pay
The Ordinance against Excessive Remuneration in Listed Companies Limited by Shares, which came into force on 1 January 2014, marked an initial, interim step in the implementation of the ’Fat-Cat’ initiative. It provides a substantial basis for amendments to the Swiss Code of Obligations, the Occupational Pensions Act, and the Swiss Criminal Code. It is intended to set certain guidelines for joining bonuses (outlawing ’golden welcome packages’), and for the level of compensation paid in connection with non-compete clauses.
In view of the outcomes of the consultation process, the Federal Council has nonetheless decided to drop its initial proposals concerning a right under company law for shareholders to institute legal proceedings at the expense of the company, a duty to establish and operate an electronic shareholder forum, a duty to regulate the relationship between fixed and variable compensation in the company’s articles of association, and a ban on advance votes on variable pay. However, if such a vote is held, a consultative vote on the compensation report will then be mandatory.
Gender representation guidelines at senior executive level
The key elements of the reform of company law also include guidelines on gender representation at senior executive level. Men and women should each make up at least 30 per cent of the boards of directors of major listed companies. At executive board level, the Federal Council has lowered this requirement to 20 per cent, from 30 per cent in the preliminary draft. The situation at executive board level differs from that for boards of directors because members require more specific specialist and industry knowledge. The comply-or-explain approach will apply if a company fails to meet these gender guidelines. It will have to disclose the reasons for its non-compliance, as well as current and planned action to meet the targets.
Transparency in the commodities sector
In addition, the Federal Council wishes to make financial flows within the commodities sector more transparent, and thus promote responsible action on the part of companies. The proposal draws on EU law but does not expand upon it. Systemically significant companies in the extractive sector will thus have to disclose payments to state bodies in excess of 120,000 Swiss francs per financial year. As proposed in the consultation draft, the Federal Council is to have the power to extend these transparency provisions to companies trading in commodities, as part of an internationally agreed process.
In this round of reforms, the Federal Council is not planning to address the duties of the boards of directors of major companies to report on non-financial issues such as environmental protection and human rights. These will be the subject of a later review.
More flexible company foundation and capital requirements
Finally, the preliminary draft also includes new rules on establishing companies and on capital, such as a new capital band and the option of share capital being in a foreign currency. These provisions received clear support during the consultation process. The public certification of the documents establishing simply-structured companies will no longer be required. In addition, it will remain possible to have partially paid-up share capital. The new provisions constitute a liberalisation of company law, bringing greater flexibility and a reduction in red tape. The closer alignment of company law with the financial reporting legislation that came into force on 1 January 2013 was also warmly welcomed.
Last modification 04.12.2015