SWITZERLAND Law and Practice Contributed by: Judith Raijmakers and Florian Thomas Willi, Loyens & Loeff
lead to entry into the above-mentioned database (also referred to as a watch list). 4.3 Remuneration Requirements Remuneration Requirements Based on the Banking Act The BankA provides for remuneration require - ments applicable to SIBs. If a SIB or its parent company receives state aid (despite the imple - mentation of the special measures required for SIBs), the Federal Council is mandated to implement measures concerning remunera - tion. In particular, the Federal Council has the authority to either wholly or partially prohibit the payment of bonuses or to mandate changes to the remuneration system of the bank. Further - more, SIBs are required to include provisions in their remuneration systems that limit the entitle- ment to bonuses in the event of state support. The overarching objective of this regulation is to ensure that banks benefiting from state aid appropriately adjust their remuneration frame - works. Remuneration Requirements Based on FINMA-Circular 2010/1 FINMA issued the Circular 2010/1 “Remu - neration schemes”, which sets out principles on remuneration systems of, inter alia, banks. It defines minimum standards for the design, implementation and disclosure of remuneration schemes in financial institutions. In particular, it establishes ten principles for minimum standards that must be observed in this context (subject to the principle of proportionality). Only banks of a certain size (those that, in their capacity as a single entity or financial group, are required to maintain equity capital in the amount of at least CHF10 billion under the CAO) are obliged to implement the circular, although FINMA rec - ommends that all banks do so as best practice. Deviations from the principles set out in the
circular are possible, although only in justified exceptional circumstances, and such deviations must be disclosed (“comply or explain”). Remuneration Requirements with Respect to Financial Services FinSA and FinSO require that remuneration sys - tems do not incentivise non-compliance with legal obligations related to the provision of a financial service. Remuneration Requirements for Listed Companies Under Swiss corporate law, a bank may be in scope of the compensation requirements that apply to listed stock corporations incorporat - ed under Swiss law with a registered office in Switzerland. Such requirements are set out in the Swiss Code of Obligations and include, for example, a compensation report and voting on compensation. Internal Remuneration Requirements As mentioned in 4.1 Corporate Governance Requirements , the remuneration system for the independent control bodies and internal audit function should be designed in a way as to not create any conflicts of interest. Outlook In April of this year – driven by the Credit Suisse crisis – the Federal Council adopted the report on banking stability. In this report, the Federal Council proposes a series of measures on varia - ble remuneration. Pursuant to the report, a clear legal framework should ensure that remunera - tion systems are closely aligned with an institu - tion’s long-term economic success and may not incentivise excessive risk-taking.
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