What does Corporate Governance mean?

Rules referred to as Corporate Governance enable the monitoring of corporate management. In Switzerland, there is the "Swiss Code of Best Practice for Corporate Governance" and the Corporate Governance Guidelines of the SIX Swiss Exchange.

Under the English term Corporate Governance, rules are understood that regulate the relationship between shareholders and executives in a company. The guidelines primarily serve to protect shareholders and to monitor corporate management.

Contents of Corporate Governance

There is no uniform definition for the term Corporate Governance. According to general understanding, however, all rules and guidelines that govern the relationship of a company's executives to its shareholders fall under this term. Therefore, Corporate Governance encompasses internal guidelines as well as external regulations. Ultimately, it is up to the individual company or its supervisory boards to determine the company's Corporate Governance guidelines.

At its core, Corporate Governance is about monitoring the activities of management without limiting their scope of action. Possible areas of regulation include risk management, the structuring of the election of executive members, or corporate communication. Disclosure of the remuneration of board members and executive management members is also generally part of Corporate Governance. Overall, it is important that the selected Corporate Governance guidelines align with the interests of the stakeholders and allow for transparency.

Corporate Governance in Switzerland

In Switzerland, there are two well-known frameworks for shaping Corporate Governance. The "Swiss Code of Best Practice for Corporate Governance" is a guideline issued by the business association economiesuisse. It represents so-called Soft Law, meaning that there is generally no obligation to follow the rules, but many companies do so voluntarily. Companies expect various benefits from adhering to these principles. On one hand, Corporate Governance rules enable efficient corporate management, on the other hand, they reduce the risk of liability lawsuits against the board of directors and the audit office. As Corporate Governance guidelines also increase transparency, they improve a company's reputation. In addition to the "Swiss Code of Best Practice for Corporate Governance," there are the Corporate Governance Guidelines of the Swiss Exchange SIX Swiss Exchange. These are mandatory for all companies listed on the SIX.

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