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Switzerland

Corporate governance has become a fashionable term in Switzerland in recent times. Nonetheless, there is no legal definition of the term under Swiss law. Corporate governance rules are increasingly found in various enactments, such as the Swiss Federal Code of Obligations (company law) or the Federal Law on Stock Exchanges and Securities Trading and the listing rules based thereon.

In light of the increased criticism abroad of corporate governance in Switzerland, the SWX Swiss Exchange has drawn up corporate governance guidelines and presented them for comment to interested circles (stock exchange participants, specialists etc). The results of the comments are being evaluated and the guidelines are planned to take effect on July 1 2002.

At the same time, Economiesuisse, the umbrella association of the Swiss economy, launched a project with a similar thrust. A group of experts drafted a so-called "Swiss code of best practice". This, too, has been presented for comment to interested circles.

The objective of the guidelines is to make key information concerning listed issuers available. The subject matter of the guidelines constitutes the duty of disclosure of the issuer with respect to its internal organization and its relationship with the investors (shareholders). The Guidelines apply to all issuers whose equity securities are listed exclusively or primarily on the SWX. The information listed in these Guidelines must basically be disclosed in full. The issuer, however, can waive the disclosure of specific information if, in lieu thereof, the issuer publishes reasons for the waiver (the rule of "comply or explain").

In contrast, the Swiss code of best practice merely provides guidelines and recommendations and does not therefore attempt to be in the nature of binding regulations. The main focus of the code is the relationship between the shareholder and the company. Furthermore, it deals with the organization of the board of directors and management.

Both sets of rules, the SWX guidelines and the code of best practice, are suited to developing a corporate governance culture in Switzerland.

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