Corporate Governance
Corporate governance refers to the principles and rules on how a company is to be managed, administered and controlled. Good corporate governance promotes transparency, control and integrity and thus trust in the company's management. This ultimately serves to promote long-term investment and financial stability.
No company is too small not to set itself minimum standards for corporate governance. This involves the simplest things: the four-eyes principle, no function without accountability, regular financial reporting, rules to protect employees from bullying and attacks on their mental or physical integrity. It's the content that counts, not the scope.
The federal government and the private sector represent Switzerland's interests in international bodies, particularly in the OECD (Organization for Economic Cooperation and Development), in order to promote uniform rules and standards of corporate governance.
The majority of corporate governance rules are characterized by the fact that they are not legally binding (soft law), both at national and international level (principles, guidelines, codes, recommendations, etc.).
At international level, the OECD is considered the most active international organization in the area of corporate governance.
Corporate governance must be distinguished from responsible business conduct/corporate social responsibility. The latter relates to the impact of business activities on society and the environment, while corporate governance structures the relationships between the company management, the Board of Directors, shareholders and stakeholders.
Special corporate governance rules apply to public companies.
Due to the social and political developments that have arisen in recent years as a result of the various crises (in particular the health, climate and energy crises), the trend in corporate governance is towards a convergence of economic, social and environmental objectives. Rules and principles are being developed for sustainable corporate governance, including the disclosure of information, gender diversity on the Board of Directors and the consideration of ESG criteria.
Frequently asked questions on corporate governance (CG)
Corporate governance governs the relationship between the shareholders, the Board of Directors and the Management Board. Explanations.
Corporate governance (CG) refers to all principles and rules that can be used to control and monitor the structures and behavior of top management.
In Switzerland, the "Swiss Code of Best Practice for Corporate Governance" - the guidelines of the umbrella organization "Economiesuisse" - and the corporate governance guidelines of the Swiss stock exchange Six Swiss Exchange are the most widely used..."
The central topic of CG is the relationship between shareholders as owners, the board of directors and the operational management. The basis for this is formed by the legal obligations of the board of directors, whereby the requirements placed on boards of directors - even in SMEs - have become increasingly comprehensive and complex. Corporate governance means more than simply complying with legal requirements. It is also beneficial for SMEs to follow the principles of good corporate governance.
The most important criteria:
Board of Directors
Operational and strategic management should be separated, independent personalities should be involved.
Shareholders
The position of shareholders vis-à-vis management and the Board of Directors is to be strengthened.
Financial control
The Board of Directors must be informed of financial crises in a timely manner. Institutional investors should exercise their monitoring control more actively. Lenders should be better informed, which also improves the assessment by rating agencies.
Auditors
Must be independent of the Board of Directors in every respect.
The advantages of corporate governance are obvious: efficient company management (e.g. also with regard to succession planning), lower risk of a liability claim against the BoD, better financing options thanks to transparency and control.
Corporate governance defines how a company is managed and monitored. What exactly this regulatory framework looks like is primarily determined by the legislator - with its criminal and civil laws - and the owner, i.e. the company itself.
In principle, two opposing corporate governance systems can be identified: The monistic and the dualistic system.
In Germany, the corporate governance report is now part of the management report and is only mandatory for listed companies. Compliance with the German Corporate Governance Code is not mandatory, but reporting on it is.
While corporate governance focuses on the company as a whole and its external impact on investors and shareholders, compliance refers specifically to the internal compliance of employees and management.
The specific structure is the responsibility of the Supervisory Board or Board of Directors and the company management.