SWITZERLAND Law and Practice Contributed by: Lorenzo Olgiati and Pascal Hubli, Schellenberg Wittmer Ltd
• listed companies that trade their shares at a stock exchange, have bonds outstanding, or contribute at least 20% of the assets or of the turnover to the consolidated accounts of a listed company; • companies that exceed two of the following thresholds in two consecutive financial years – a balance sheet total of CHF20 million, sales revenue of CHF40 million, and/or 250 full-time positions on annual average; • companies that are required to prepare consoli - dated accounts; • where the company’s shareholders who represent at least 10% of the share capital so request; or • where the articles of association provide for it or the shareholders’ meeting decides that the annual accounts are subject to an ordinary audit, even if the law does not require it. Auditors are accountable and may be liable to the company and to the shareholders and creditors for losses arising from any intentional or negligent breach of their duties. 6.2 Risk Management and Internal Controls Swiss financial reporting rules require that companies or groups of companies subject to an ordinary (full) audit (see 6.1 External Auditors ) undergo a review (to be confirmed by the auditors) regarding the exist - ence of an appropriate internal control system. There are, however, no statutory requirements for the spe - cific establishment and effective organisation of the internal control system. This responsibility lies with the board of directors. An exception applies to banks and private insurance companies, for which FINMA has set forth specific requirements regarding risk man - agement and internal controls in the relevant circu - lars (“Corporate Governance – banks” and “Corporate Governance – insurers”, respectively). Such companies additionally have to report on the company’s risk assessment process and the identified material risks in the management report accompany - ing the annual financial statements. These provisions should ensure that the corporate risk of medium-sized and large enterprises is regularly monitored and ana - lysed. The ultimate responsibility lies with the board of directors, which has to evaluate material business-
related risks in a forward-looking and systematic man - ner. In addition, the SCBP recommends that the board should provide internal control and risk management systems that are suitable for the company; it should encompass risk management, compliance and finan - cial monitoring. In addition, the effectiveness of the internal control system should be assessed by an internal audit.
7. Environmental, Social and Governance 7.1 ESG Requirements
According to the Swiss Corporate Social Responsi - bility Action Plan, the Swiss government’s approach focuses on: • sensitising domestic companies to ESG; • offering support to companies seeking to address relevant issues; • promoting transparency; and • establishing best practices based on international standards. At the same time, recent ESG-related legislative changes have been introduced, aligning with interna - tional legislative developments. Gender Representation on the Board of Directors and in the Executive Management Swiss-listed companies exceeding two of the follow - ing thresholds in two consecutive financial years – a balance sheet total of CHF20 million, sales revenue of CHF40 million, and/or 250 full-time positions on annual average – are required to implement certain gender quotas for the board of directors (at least 30% of each gender) and the executive management (at least 20% of each gender) under the “comply or explain” concept (Article 734f, CO). The threshold is calculated at group level. Any com - pany that fails to meet the mentioned requirements must disclose the reasons for missing the quotas in its remuneration report, along with the actions that are being taken to improve the situation. Privately
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