SWITZERLAND Law and Practice Contributed by: Lorenzo Olgiati and Pascal Hubli, Schellenberg Wittmer Ltd
periods for service or employment agreements with members of the board or the executive management. In any event, notice periods or fixed contract terms exceeding one year are not permitted. Certain types of compensation– eg, sign-on bonuses that do not compensate for an actual financial disad - vantage, non-statutory severance payments (“golden parachutes”), undue advanced compensation (“gold - en hello”) or certain types of transaction bonuses – are not allowed. The payment or receipt of such imper - missible compensation is punishable by imprisonment and fines. Special Requirements During Public Bids Following the launch of a public takeover offer, any amendments to executive agreements with execu - tive management members may qualify as defensive measures and as such may not be altered subject to the approval by the shareholders’ meeting and a review and approval by the TOB. Even in a pre- bid phase, the TOB may, as case law demonstrates, declare changes to agreements of executive manage - ment null and void if fundamental principles of compa - ny law – in particular, the duty to act in the company’s best interests – are disregarded. Disclosure of Payments to Directors/Officers Privately held companies are not required to specifi - cally disclose the remuneration, fees or benefits pay - able to their directors and executive management. For listed companies, however, Swiss company law requires the disclosure of the respective aggregate remuneration amounts for both the board and the executive management, the total compensation of each of the board members as well as the highest total compensation among the members of executive management. All this information is to be disclosed in a separate audited compensation report to the shareholders and the information on remuneration must also be publicly disclosed in the annual report, including the amount, structure, and components of compensation. The SIX Directive Corporate Governance extends the above-mentioned requirement to all issuers with a primary listing at the SIX Swiss Exchange (ie, with no other main listing) whether incorporated in Swit -
zerland or not. In addition, it requires disclosure of information on the basic principles and elements of compensation and share-ownership programmes as well as of the method of their determination. For regulated entities (ie, banks, insurances, funds and branches thereof) FINMA has issued rules in its circular “Remuneration Schemes”. These rules con - tain the basic principles and general elements of com - pensation with regard to all employees, directors and officers of the company. However, implementation of these rules is only compulsory for larger banks and insurance companies. Consequences for Non-Compliance If remuneration is paid without proper shareholder approval, the excess amounts can be reclaimed by the company, and the board members or executives may be held personally liable for breaching their statutory duties under the CO. In addition, for regulated enti - ties such as banks and insurers, FINMA may impose supervisory measures, including fines, sanctions, or restrictions on directors or officers involved. The shareholders’ meeting is the supreme body of a company. The shareholders are entitled to elect and remove the board members and the statutory audi- tors. Shareholders exercise their control by electing the board members and by deciding on matters which are within their competence (see 2.2 Types of Deci- sions ). Swiss company law grants shareholders a variety of rights, which can be categorised into (i) participation and (ii) property rights. These include the right to infor - mation and inspection as well as the right to determine dividends. The SCBP emphasises the importance of providing comprehensive information to sharehold - ers to enable them to exercise their rights on a fully informed basis. 4. Shareholders 4.1 Companies and Shareholders Swiss companies maintain a share register, which records the name, address, and the number of shares held by each registered shareholder. However, this list
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