The au­thors of the “Guide­lines for in­sti­tu­tional in­vestors gov­ern­ing the ex­er­cis­ing of par­tic­i­pa­tion rights in pub­lic lim­ited com­pa­nies” (“Guide­lines”) have for­mu­lated the fol­low­ing five basic prin­ci­ples with a view to af­firm­ing this re­spon­si­bil­ity:

These guide­lines gov­ern the ex­er­cis­ing of par­tic­i­pa­tion rights in Swiss listed com­pa­nies. How­ever, some of the prin­ci­ples may also be ap­plied where ap­pro­pri­ate as the basis for the ex­er­cis­ing of par­tic­i­pa­tion rights in for­eign or non-listed com­pa­nies or or­gan­i­sa­tions (in­clud­ing those with a legal form other than that of pub­lic lim­ited com­pany).

In­sti­tu­tional in­vestors have to be fully aware of their par­tic­u­lar re­spon­si­bil­ity to­wards their clients and re­spect their im­por­tant role in en­sur­ing long-term, ef­fec­tive cor­po­rate gov­er­nance of the com­pa­nies in which they hold eq­uity se­cu­ri­ties. They shall ex­er­cise their par­tic­i­pa­tion rights dili­gently and in the in­ter­ests of their clients. The au­thors of these Guide­lines have for­mu­lated the fol­low­ing five basic prin­ci­ples with this in mind. In­sti­tu­tional in­vestors who agree to abide by these Guide­lines are re­quired to ei­ther fully com­ply with these for­mu­lated prin­ci­ples or ex­plain in a state­ment of ac­count­abil­ity on their web­site why they de­vi­ate from one or more of them (“com­ply or ex­plain”).

It is deemed ap­pro­pri­ate for in­sti­tu­tional in­vestors to ex­er­cise their par­tic­i­pa­tion rights if the as­so­ci­ated ex­pen­di­ture is jus­ti­fi­able and rea­son­able from the point of view of ad­e­quately safe­guard­ing the in­ter­ests of their clients. In par­tic­u­lar, the ex­er­cis­ing of par­tic­i­pa­tion rights in­cludes entry in the share reg­is­ter as a share­holder with vot­ing rights and the ex­er­cis­ing of vot­ing rights at the gen­eral meet­ing of share­hold­ers. In­sti­tu­tional in­vestors are re­quired to spec­ify the cir­cum­stances under which loaned eq­uity se­cu­ri­ties (“se­cu­ri­ties lend­ing”) are to be re­called for the ex­er­cis­ing of their par­tic­i­pa­tion rights.

Par­tic­i­pa­tion rights shall be ex­er­cised in the in­ter­ests of clients. In ex­er­cis­ing these rights, in­sti­tu­tional in­vestors should adopt a long-term and sus­tain­able ap­proach, un­less the rel­e­vant in­vest­ment guide­lines stip­u­late to the con­trary. When ex­er­cis­ing their par­tic­i­pa­tion rights, in­sti­tu­tional in­vestors shall take due ac­count of the spe­cific cir­cum­stances of each in­di­vid­ual case and thus avoid the con­cept of “one size fits all”. In their in­vest­ment guide­lines, in­sti­tu­tional in­vestors are re­quired to de­fine the man­ner in which they ex­er­cise their par­tic­i­pa­tion rights. They may form their opin­ions in the course of ap­pro­pri­ate di­a­logue with the in­volved com­pa­nies, and if any con­tro­ver­sial is­sues arise they should at­tempt to re­solve them by con­tact­ing the com­pa­nies con­cerned. In­sti­tu­tional in­vestors are obliged to ex­er­cise their par­tic­i­pa­tion rights in­de­pen­dently of any po­lit­i­cal cri­te­ria or in­struc­tions from third par­ties. In­sti­tu­tional in­vestors should avoid any con­flicts of in­ter­est. In the event of un­avoid­able con­flicts of in­ter­est they shall dis­close them and take the nec­es­sary ac­tion to over­come them.

In­sti­tu­tional in­vestors may not del­e­gate their re­spon­si­bil­ity for their par­tic­i­pa­tion rights to third par­ties. This does not rule out the as­sign­ment of the ex­er­cis­ing of vot­ing rights within the scope of an asset man­age­ment man­date, as long as the ex­er­cis­ing of vot­ing rights com­plies with the spec­i­fied cri­te­ria. In­sti­tu­tional in­vestors may also call on the ser­vices of proxy ad­vi­sors.

In­sti­tu­tional in­vestors must se­lect their vot­ing rights rep­re­sen­ta­tives and proxy ad­vi­sors with suf­fi­cient care and en­sure that they re­ceive ap­pro­pri­ate in­struc­tion and are ad­e­quately su­per­vised. In­sti­tu­tional in­vestors must care­fully con­sider the rec­om­men­da­tions made by their proxy ad­vi­sors with a crit­i­cal eye, and in par­tic­u­lar ex­am­ine their rec­om­men­da­tions in order to iden­tify any po­ten­tial con­flicts of in­ter­est. They shall en­sure that the proxy ad­vi­sors duly dis­close any con­flicts of in­ter­est and take the nec­es­sary ac­tion. If any con­tro­ver­sial is­sues should arise, the proxy ad­vi­sors shall pass on their rec­om­men­da­tions in ad­vance to the com­pa­nies con­cerned. Wher­ever pos­si­ble, “se­cu­ri­ties lend­ing” prior to a gen­eral meet­ing of share­hold­ers should be avoided or sus­pended if there are any con­tro­ver­sial items on the agenda that have to be voted on and which could be of rel­e­vance in terms of the client’s in­ter­ests.

The prin­ci­ples and processes in­volved in ex­er­cis­ing in­sti­tu­tional in­vestors’ par­tic­i­pa­tion rights shall be dis­closed in such a man­ner as to en­able an ef­fec­tive re­view. In­sti­tu­tional in­vestors are obliged to de­fine the prin­ci­ples gov­ern­ing the ex­er­cis­ing of their par­tic­i­pa­tion rights and vot­ing rights (“guide­lines con­cern­ing vot­ing rights”), as well as the process by which the de­ci­sion re­gard­ing the ex­er­cis­ing of par­tic­i­pa­tion rights is reached (in the form of a writ­ten pol­icy).

The pol­icy also has to stip­u­late whether and, if so, how in­sti­tu­tional in­vestors are to co­or­di­nate the ex­er­cis­ing of their par­tic­i­pa­tion rights with other in­vestors, and/or how they are to call on the ser­vices of proxy ad­vi­sors.

At least once a year, in­sti­tu­tional in­vestors are re­quired to issue a re­port (in the form of an ac­count­abil­ity state­ment) sum­maris­ing the par­tic­i­pa­tion rights they have ex­er­cised. How­ever, they do not have to dis­close de­tails re­gard­ing vot­ing in in­di­vid­ual cases. In the ac­count­abil­ity state­ment, in­sti­tu­tional in­vestors are obliged to dis­close the ex­tent to which they may have as­signed the ex­er­cis­ing of their vot­ing rights to asset man­agers or have called on the ser­vices of proxy ad­vi­sors, and how the rel­e­vant re­la­tion­ships are struc­tured.

• Clients: Third par­ties who en­trust in­sti­tu­tional in­vestors with the fidu­ciary man­age­ment of as­sets, in­clud­ing in­sured par­ties and/or ben­e­fi­cia­ries in the case of pen­sion schemes.
• Eq­uity se­cu­ri­ties: Eq­uity and book-entry se­cu­ri­ties which rep­re­sent the right of par­tic­i­pa­tion in a com­pany. Se­cu­ri­ties which in­volve par­tic­i­pa­tion rights (no­tably shares) are par­tic­u­larly rel­e­vant for these Guide­lines.
• In­sti­tu­tional in­vestors: In­vestors who are en­trusted with the man­date of hold­ing eq­uity se­cu­ri­ties for clients on a fidu­ciary basis.
• Par­tic­i­pa­tion rights: Rights which allow the share­hold­ers to par­tic­i­pate in com­pany busi­ness, no­tably the right to par­tic­i­pate in and vote at the gen­eral meet­ing of share­hold­ers.

The “Guide­lines for in­sti­tu­tional in­vestors gov­ern­ing the ex­er­cis­ing of par­tic­i­pa­tion rights in pub­lic lim­ited com­pa­nies” (here­inafter re­ferred to as “Guide­lines”) de­scribe best prac­tices re­lat­ing to the ex­er­cis­ing of par­tic­i­pa­tion rights. Other as­pects of re­spon­si­ble in­vest­ment such as ap­pro­pri­ate di­a­logue be­tween in­sti­tu­tional in­vestors and com­pa­nies are only ad­dressed in­di­rectly and should in no way be pre­vented. By vol­un­tar­ily adopt­ing these guide­lines, in­sti­tu­tional in­vestors send a clear sig­nal that they take their re­spon­si­bil­ity to­wards their clients se­ri­ously. In this way, they thus un­der­score their ac­cep­tance of their oblig­a­tion to recog­nise and duly im­ple­ment par­tic­i­pa­tion rights.

In sum­mer 2011, economiesu­isse, in­sti­tu­tional in­vestors, proxy ad­vi­sors and reg­u­la­tory au­thor­i­ties joined forces to for­mu­late the Guide­lines. This move was made in re­sponse to grow­ing po­lit­i­cal pres­sure on in­sti­tu­tional in­vestors to ex­er­cise their rights in a more sys­tem­atic man­ner. Along­side the “Swiss Code of Best Prac­tice for Cor­po­rate Gov­er­nance” (here­inafter re­ferred to as “Swiss Code”), which is ad­dressed to com­pa­nies listed on the stock mar­ket, these Guide­lines sup­ple­ment the ex­ist­ing self-reg­u­la­tion in­stru­ments re­lat­ing to good cor­po­rate gov­er­nance in the area of par­tic­i­pa­tion rights. In this way, the Swiss econ­omy is able to po­si­tion it­self among the lead­ing fi­nan­cial cen­tres in this area.

In ex­er­cis­ing their par­tic­i­pa­tion rights, in­sti­tu­tional in­vestors such as pen­sion funds, in­sur­ance com­pa­nies and in­vest­ment funds bear a great deal of re­spon­si­bil­ity. In view of this it is es­sen­tial that, in the same way as listed com­pa­nies, they have the nec­es­sary cor­po­rate good gov­er­nance in­stru­ments at their dis­posal for ex­er­cis­ing par­tic­i­pa­tion rights. For ca­pac­ity rea­sons, the ma­jor­ity of in­sti­tu­tional in­vestors are un­able to carry out in-depth analy­ses of the items on the agen­das of gen­eral meet­ings of share­hold­ers of all com­pa­nies in which they hold shares, and they there­fore call on the ser­vices of proxy ad­vi­sors. This means that the lat­ter sig­nif­i­cantly in­flu­ence in­di­vid­ual votes at the gen­eral meet­ings of share­hold­ers of listed com­pa­nies. It is often the case that the prin­ci­ples and processes ac­cord­ing to which in­sti­tu­tional in­vestors ex­er­cise their par­tic­i­pa­tion rights, and proxy ad­vi­sors make their spe­cific rec­om­men­da­tions, are not suf­fi­ciently com­mu­ni­cated and dis­closed. Fur­ther­more, proxy ad­vi­sors some­times find them­selves faced with con­flicts of in­ter­ests.

The no­tion that in­sti­tu­tional in­vestors should have their own cor­po­rate good gov­er­nance in­stru­ments at their dis­posal for ex­er­cis­ing par­tic­i­pa­tion rights is by no means new. In Switzer­land, Ar­ti­cle 49a, para­graph 2b of the Swiss Fed­eral Or­di­nance on Su­per­vi­sion in Oc­cu­pa­tional Pen­sion Plans has for a num­ber of years stip­u­lated that the gov­ern­ing body of an oc­cu­pa­tional pen­sion fund must for­mu­late reg­u­la­tions that are to be ap­plied in the ex­er­cis­ing of the rights of share­hold­ers in the fund. In ad­di­tion, Ar­ti­cle 23, para­graph 1 of the Col­lec­tive In­vest­ment Schemes Act for in­vest­ment funds stip­u­lates that mem­ber­ship and cred­i­tor rights as­so­ci­ated with in­vest­ments must be ex­er­cised by the fund man­age­ment in­de­pen­dently and ex­clu­sively in the in­ter­ests of the in­vestors. In their re­spec­tive codes of con­duct, the As­so­ci­a­tion of Swiss Pen­sion Fund Providers (ASIP) and the Swiss Funds As­so­ci­a­tion (SFA) also par­tially ad­dress the ex­er­cis­ing of 3 Con­text par­tic­i­pa­tion rights by in­sti­tu­tional in­vestors. In Eng­land, a doc­u­ment en­ti­tled “UK Stew­ard­ship Code” was pub­lished in July 2010 which for­mu­lates a spe­cific code of con­duct for in­sti­tu­tional in­vestors in the form of seven prin­ci­ples. Sim­i­lar codes are cur­rently in prepa­ra­tion in var­i­ous other coun­tries. In ad­di­tion, the “Green Paper on the EU Cor­po­rate Gov­er­nance Frame­work” pub­lished by the Eu­ro­pean Com­mis­sion in 2011 and the re­cently pub­lished “Ac­tion Plan: Eu­ro­pean com­pany law and cor­po­rate gov­er­nance – a mod­ern legal frame­work for more en­gaged share­hold­ers and sus­tain­able com­pa­nies” also ad­dress these is­sues in de­tail.

The Guide­lines rep­re­sent a prag­matic Swiss ap­proach. In the same way as in the Swiss Code for Swiss listed com­pa­nies, in these Guide­lines the best prac­tices for in­sti­tu­tional in­vestors are de­scribed in the form of prin­ci­ples and do not spec­ify de­tailed re­quire­ments. They are to be re­viewed on a pe­ri­od­i­cal basis and up­dated as nec­es­sary.

The Guide­lines form an in­te­gral part of the self-reg­u­la­tion mech­a­nism that in­sti­tu­tional in­vestors and proxy ad­vi­sors can abide by vol­un­tar­ily if they are fun­da­men­tally in agree­ment with the de­fined prin­ci­ples. Even if they vol­un­tar­ily adopt the cited prin­ci­ples, how­ever, they still have the op­tion of de­vi­at­ing from in­di­vid­ual reg­u­la­tions (prin­ci­ple of “com­ply or ex­plain”).

Al­though it is ul­ti­mately up to each in­sti­tu­tional in­vestor and proxy ad­vi­sor to de­cide whether to vol­un­tar­ily abide by the Guide­lines, in order to se­cure their ac­cep­tance it is im­por­tant that they re­ceive broad recog­ni­tion and sup­port. On the other hand, recog­ni­tion of the Guide­lines of­fers the in­volved or­gan­i­sa­tions an op­por­tu­nity to pre­sent them­selves as firm sup­port­ers of the prin­ci­ples of good cor­po­rate gov­er­nance in the ex­er­cis­ing of par­tic­i­pa­tion rights.

The au­thors hope that the in­vest­ment com­mu­nity will ac­knowl­edge and wel­come the Guide­lines, since it is their own in­ter­ests that are at stake, as well as those of Swiss listed com­pa­nies and ul­ti­mately the smooth func­tion­ing of the mar­ket and the Swiss econ­omy in gen­eral.

ASIP
Schweiz­erischer Pen­sion­skassen­ver­band
Kreuzs­trasse 26
8008 Zürich
Phone: +41 43 243 74 15
Tele­fax: +41 43 243 74 17
info@​asip.​ch
http://​www.​asip.​ch/

Aus­gle­ichs­fonds AHV/IV/EO
Fonds de com­pen­sa­tion AVS/AI/APG
Boule­vard Georges-Favon 6
Post­fach 5756
1211 Genf 11
Phone: +41 58 201 65 65
http://​www.​ahvfonds.​ch/

economiesu­isse
Ver­band der Schweizer Un­ternehmen
Heg­ibach­strasse 47
Post­fach
8032 Zürich
Phone: +41 44 421 35 35
Tele­fax: +41 44 421 34 34
info@​eco​nomi​esui​sse.​ch
http://​www.​eco​nomi​esui​sse.​ch/

Ethos
Die Stiftung für nach­haltiges In­vest­ment und ak­tives Ak­tionar­iat
Gess­ner­allee 32
8001 Zürich
Phone: +41 44 421 41 11
Tele­fax: +41 44 421 41 12
info@​ethosfund.​ch
http://​www.​ethosfund.​ch/

Schweiz­erische Bankiervere­ini­gung
Post­fach 4182
4002 Basel
Phone: +41 61 295 93 93
Tele­fax: +41 61 272 53 82
of­fice@​sba.​ch
http://​www.​swi​ssba​nkin​g.​org/

Swis­sH­old­ings
Nägeli­gasse 13
3011 Bern
Phone: +41 31 356 68 68
Tele­fax: +41 31 352 32 55
sh@​swi​ssho​ldin​gs.​ch
http://​www.​swi​ssho​ldin​gs.​ch/

Schweiz­erischer Ver­sicherungsver­band SVV
C.F. Meyer-Strasse 14
Post­fach 4288
8022 Zürich
Phone: +41 44 208 28 28
Tele­fax: +41 44 208 28 00
info@​svv.​ch
http://​www.​svv.​ch/

Down­loads

• PDF Swiss Code
• PDF Com­pli­ance-Man­age­ment
• PDF Guide­lines
• PDF Grund­la­gen­bericht
• Press re­lease 29 Sep­tem­ber 2014 (in Ger­man)