1. What is the typical organizational structure of a company and does the structure typically differ if the company is public or private?

By law, both listed and non-listed companies are required to have three corporate bodies: the shareholders' meeting, the board of directors and the external auditors. Private companies may waive the requirement to perform an audit of their annual accounts (and, therefore, to appoint external auditors) if certain criteria are met.

In listed companies as well as larger private companies, the day-to-day management is typically delegated by the board of directors to the executive management, often called "executive committee" or similar (see question 5).

Further, listed companies are required to establish a compensation committee whose members are elected by the shareholders' meeting from among the board members. The board of directors typically establishes further committees (see question 9).

2. Who are the key corporate actors (e.g., the governing body, management, shareholders and other key constituencies) and what are their primary roles? How are responsibilities divided between the governing body and management?

The key corporate actors are the board of directors, the executive management and the shareholders (acting at the general meeting of shareholders). The board of directors may pass resolutions on all matters not reserved to the shareholders' meeting by law or the articles of association. Subject to certain non-transferable duties pursuant to statutory law which include, among other things, determining the strategy of the company and supervising management, it may delegate all other duties, namely the management of the company, to the executive management based on an authorization in the articles of association and the adoption of organizational regulations. However, such organizational regulations in most cases reserve certain matters for approval by the board of directors, such as significant acquisitions or disposals.

While the law states that the shareholders' meeting is the supreme governing body, its powers are generally confined by law and may be extended by the articles of association in very limited cases only. See question 20.

3. What are the sources of corporate governance requirements?

Swiss company law is primarily set out in art. 620 ff. of the Swiss Code of Obligations ("CO"). The most relevant additional source for listed companies is the Ordinance against Excessive Compensation in Listed Companies ("OaEC"). The OaEC is applicable to Swiss companies listed on either a Swiss or foreign exchange. It provides for a mandatory "say on pay" by shareholders regarding executive compensation, the prohibition of severance and certain other forms of payments as well as the duty of the board of directors to produce an annual remuneration report, among further rules. Additionally, companies listed on the SIX Swiss Exchange ("SIX") are subject to SIX's regulations, including the Directive on Information Relating to Corporate Governance ("DCG") which requires companies to publish a Corporate Governance section in the annual report.

The Swiss Code of Best Practice for Corporate Governance ("SCBP") issued by economiesuisse, a private association of Swiss business, contains guidelines regarding matters of Corporate Governance. The SCBP follows a comply-or-explain approach, allowing companies to deviate from the SCBP's provisions if they provide a suitable explanation. Although compliance with the SCBP is not mandatory, its provisions are widely observed and it is thus an important part of the Swiss legal framework. Guidelines by proxy advisors (see question 26 below) have also gained importance in recent years and are taken into account by a growing number of companies.

4. What is the purpose of a company?

Swiss companies are by default profit-oriented. In following its corporate purpose as defined in a company's articles of association, a company's board of directors should pursue the longterm interest of shareholders. At the same time, the board of directors is, pursuant to existing case law, allowed to appropriately take into account the interests of other constituencies, including employees, customers and creditors.

5. Is the typical governing body a single board or comprised of more than one board?

The mandatory governing body of Swiss companies limited by shares is the board of directors. By default, the law provides for a one-tier board system, i.e. the board is responsible for the management of the company and represents the company in relation to third parties.

However, it is possible – and customary for listed or other larger companies – that the board delegates the daily business to the executive management / an executive committee (see question 2 above). This results in a two-tier governance structure in which the board of directors is mainly tasked with the ultimate direction and strategy of the company as well as the oversight over the executive management. The executive management may be personally fully separated from the board, or certain members of the executive management (such as the CEO) may also sit on the board (see question 15).

6. How are members of the governing body appointed and removed from service?

Members of the board are appointed and removed by the general meeting of shareholders, usually upon recommendation of the board of directors. For listed companies, the OaEC requires that board members be elected individually and on an annual basis. Board members of non-listed companies are elected for a term of three years unless otherwise provided in the articles of association (up to a maximum of six years). It is not possible for the board to fill vacancies by itself.

Members of the executive management are appointed and removed by the board of directors.

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