Opinions on exactly what the term corporate governance implies can vary widely. Corporate governance embraces all the principles and rules of organization, conduct and transparency which are geared to the interests of shareholders and are designed to ensure a balance between direction and control at the highest corporate level while safeguarding decision-making power and management efficiency. It is a system based on checks and balances as well as incentives, underpinning unity of action between shareholders (general meeting), board of directors and senior management.
The "Swiss Code of Best Practice" has been drawn up by Professor Peter Böckli together with a panel of economiesuisse experts made up of representatives of the banks, listed companies, investors, pension funds, financial analysts and academics. Although based largely on current international standards and trends, it nevertheless takes into account the legal situation and the conditions prevailing in Switzerland. The idea is that an individual company should still be able to depart from these recommendations if special circumstances so warrant.The Code is geared primarily to publicly traded companies. For matters pertaining to disclosure of information on a firm's corporate governance, the Code refers to the new SWX Directive.
The Directive concerning Information on Corporate Governance issued by the SXW Swiss Exchange addresses transparency in matters of corporate governance, pursuant to the authority vested in SWX by the law. Drawn up in cooperation with the von der Crone law firm, it focuses on issuers of SWX-listed equity securities. The Directive lays down quasi-binding stipulations according to the "comply or explain" principle, but at the same time gives issuers the necessary freedom and flexibility to adopt individual solutions in justified cases. The Directive itself contains only a summary description of the underlying principles; there is an apendix with a check list of corporate governance matters, which will be the subject of a special section in future annual reports.
The analytical study by Dr Karl Hofstetter on Corporate Governance in Switzerland, which was also commissioned by the economiesuisse panel of experts, is an extremely informative piece of work. It presents the many relevant provisions in the Swiss Code of Obligations, the Stock Exchange Act, etc. in an international context. The study shows that although corporate governance in Switzerland largely meets present-day requirements, there is still a need for action in certain areas. It also points out that some amendments to Swiss legislation will have to be considered in due course.
The consultative inquiry will last until 6 November 2001 and is open to all interested parties, as well as those directly concerned. The documents can be ordered by e-mail from the SWX Swiss Exchange at cg-vernehmlassung@swx.com or downloaded from the economiesuisse website at http://www.economiesuisse.ch
