Corporate governance is concerned with the relationships between shareholders, the board of directors and the management. Here are some explanations.
Corporate governance refers to all the principles and regulations applied in order to manage, verify and monitor the structures and behavior of senior managers.
In Switzerland, the “Swiss code of good practice for corporate governance”, a guide published by the federation of Swiss companies, EconomieSuisse, and the corporate governance directives of the Swiss stock exchange, Six Swiss Exchange, are by far the most widely used.
The central theme in corporate governance is the relationships between shareholders as owners of the company, the board of directors and the management. The legal obligations of the board of directors form the basis, even though the demands on the board of directors (applying also to SMEs) have become increasingly complex and detailed.
Corporate governance involves much more than simple compliance with legal conditions. It is also useful for medium-sized companies to follow corporate governance principles.
The main criteria:
The board of directors
The operational and strategic departments should be separate and independent members should be included.
The position of shareholders should be enhanced in relation to the management and the board of directors.
The board of directors must be informed in good time of any situations indicating a financial crisis. Institutional investors need to fulfill their control and monitoring duties more actively. External investors need to be better informed. This will also improve the company’s evaluation by rating agencies.
The auditor must be completely independent of the board of directors.
The advantages of corporate governance are clear: effective company management (e.g. in terms of succession planning), minimal risk of liability proceedings against the board of directors and better financing possibilities thanks to transparency and control.