Swiss firms hit by new transparency rules

Companies will be obliged to publish managers' earnings Keystone Archive

The Swiss Stock Exchange (SWX) has introduced new regulations aimed at improving corporate governance and making companies more accountable.

The SWX’s Admission Board voted on Wednesday to adopt a code of conduct that will apply to all companies listed on the exchange. The measures come into force later this year.

The rules are designed to establish minimum standards of transparency. Companies will be required to publish information about their structure, their shareholders and the earnings of their top managers, including salary, bonuses and pension contributions.

The SWX decision comes after a code of good practice was issued by the Swiss Business Federation (economiesuisse), targeted at all companies but limited to a series of recommendations.

Directive welcomed

Heinrich Henkel, SWX chief executive officer, welcomed the introduction of the new regulations.

“I think it is good and important news for shareholders,” Henkel told swissinfo.

“It will give them a lot more in terms of transparency and it will also make Swiss companies more comparable to companies listed in the EU,” he added.

Henkel said he was confident most companies listed on the exchange would comply with the new directive.

“I think most companies will comply and I also think the directive as it stands now has found a lot of acceptance in the market,” he said.

However, some commentators have accused the Swiss authorities of dragging their feet over regulating corporate conduct.

“Botswana, for example, has had a code of corporate governance for a number of years,” said Stefano Gilardi of Centre Info, a corporate responsibility consultancy. “For a financial market the size of Switzerland, these measures are somewhat late.”

The issue of corporate governance has come to the fore in recent months following a series of high-profile affairs such as the ABB pension scandal, the boardroom battle at Kuoni and the demise of Swissair.

Lack of transparency

Swiss firms have also been accused of failing to provide sufficient information to investors, particularly those from abroad.

“These events and public criticism have convinced everybody of the necessity for improving the way corporate governance is perceived in Switzerland,” admitted Thomas Pletscher, a member of the board of directors at the Swiss Business Federation.

Pletscher headed up the group of experts who wrote the Federation’s code of good practice. But there is some doubt as to whether the code and the SWX’s new rules will actually offer shareholders better protection.

“There is still something missing,” said Dominique Biedermann, director of the Ethos Foundation, which manages investments for more than one hundred pension funds.

“There is nothing about equal treatment for all shareholders, nothing about the principle of one share equals one vote.”

But Pletscher waves aside such criticism. “Compared with other countries, our code is sufficiently clear and goes far enough,” he told swissinfo.

However, he admitted that the set of recommendations had its limitations and offered no real guarantees.

Pletscher also insisted that the human factor and the law had to be taken into account when it came to policing corporate governance.

“Commercial success also depends on management decisions and market conditions. It would be wrong to say a code like this would help stop a major Swiss firm from going bankrupt.”

swissinfo/Pierre Gobet