Proxy advisers influence the decisions of numerous shareholders every year. Until now, however, it has largely gone unnoticed when these same firms have also advised listed companies. That is now set to change. The Federal Council is proposing new transparency requirements in the Swiss Code of Obligations to disclose potential conflicts of interest and strengthen confidence in general meetings.
With the launch of the consultation process on amendments to the Swiss Code of Obligations, the Federal Council has made a fresh attempt to regulate the role of proxy advisory firms by law. The focus here is not on comprehensive regulation of these service providers, but on ensuring transparency regarding potential conflicts of interest. The preliminary draft provides that public limited companies will in future be required to disclose whether they have used the services of a firm that also issues voting recommendations to shareholders.
Why is the legislature addressing the issue of proxy advisers?
Proxy advisers, often referred to internationally as ‘proxy advisors’, analyse the agendas of general meetings and issue recommendations on how shareholders should cast their votes. Their clients primarily include institutional investors such as pension funds, asset managers and investment funds. Given the large number of shareholdings and general meetings, these recommendations provide an important basis for decision-making for many investors.
In the Federal Council’s view, proxy advisors thus fulfil an important function within the corporate governance system. They help to facilitate the exercise of shareholders’ rights, reduce administrative burdens and enable a well-informed discussion of the items on the agenda at general meetings. At the same time, their recommendations give them considerable influence over voting outcomes, without themselves bearing the financial risk of a shareholder.
It is precisely this influence that forms the basis for the proposed legislative amendment.
What is the problem?
From the Federal Council’s perspective, risks arise in particular when a proxy adviser simultaneously provides consultancy services to a company and subsequently makes recommendations to shareholders on precisely those agenda items at the preparation or drafting of which it has been involved.
Such a conflict of interest can have various consequences. On the one hand, there is a risk that a proxy adviser may recommend proposals at the drafting of which it was itself involved. On the other hand, the mere possibility of such a conflict of interest can undermine shareholders’ confidence in the independence of the recommendations. Finally, there is a risk that board members will increasingly align their proposals with the guidelines of major proxy advisors in order to secure the most favourable recommendation possible. As a result, company-specific characteristics could be sidelined.
The Federal Council, however, expressly emphasises that proxy advisors can, in principle, make an important contribution to good corporate governance. The aim of the preliminary draft is therefore not to restrict their activities, but to make potential conflicts of interest transparent to shareholders.
Why is statutory regulation necessary at all?
To date, there has been no statutory regulation governing proxy advisors in Switzerland. Various voluntary self-regulatory instruments do address corporate governance and the exercise of shareholders’ rights. In the Federal Council’s view, however, these instruments are not sufficient to ensure transparency regarding potential conflicts of interest.
Furthermore, all of Switzerland’s neighbouring countries have now introduced statutory provisions governing proxy advisors. The European Union has for several years required proxy advisors to comply with comprehensive transparency requirements under the Shareholder Rights Directive. Germany, Austria, France, Italy and Liechtenstein have also implemented corresponding regulations. The Federal Council therefore sees a need for action, not least from a comparative law perspective.
The current bill was prompted by Motion 19.4122 (Minder). This motion called on the Federal Council to establish a legal framework to ensure that conflicts of interest on the part of proxy advisors can be disclosed and avoided. Having examined various regulatory models, the Federal Council opted for a comparatively streamlined solution within the Swiss Code of Obligations.
What does the preliminary draft specifically provide for?
At the heart of the bill is the new Article 700a of the Swiss Code of Obligations.
Under this provision, the board of directors must in future disclose, in the notice convening the general meeting, whether the company or any group company has, during the current or previous financial year, received services from a firm that also provides proxy advisory services. In particular, the name and registered office of the company in question, as well as a description of the services provided, must be disclosed.
If the company has engaged the services of such a company after the invitation has been sent out, this information must be provided at the latest at the general meeting.
The preliminary draft also defines, for the first time in law, what is meant by proxy advisory services. This covers firms which, on a commercial basis, analyse information about companies, carry out research and advise shareholders on how to cast their votes or provide them with specific voting recommendations.
An exception is provided for where the advisory firm confirms that it has not issued any voting recommendations whatsoever on the agenda items of the General Meeting in question. In this case, the Board of Directors may waive the disclosure requirement.
Why has the Federal Council decided against stricter regulations?
It is noteworthy that the Federal Council has deliberately opted against more far-reaching regulatory approaches.
Options examined included a separate special law, provisions within financial market legislation, bans on certain advisory mandates, and comprehensive obligations for institutional investors. All these options were rejected.
In the Federal Council’s view, enforcing direct obligations on internationally active proxy advisors, in particular, would have been difficult. Many of the major providers are based abroad. By contrast, a disclosure obligation vis-à-vis Swiss public limited companies is much easier to enforce. At the same time, this solution interferes less with the economic freedom and freedom of contract of the companies concerned.
The legislature is thus pursuing a pragmatic approach. Transparency is intended to enable shareholders to take potential conflicts of interest into account in their own decisions, without certain business relationships being prohibited.
Practical implications for boards of directors
Should the preliminary draft be adopted in its current form, board members will need to review their processes relating to the preparation of the Annual General Meeting.
In particular, it will be necessary in future to clarify which external advisers also offer proxy advisory services and whether this triggers a disclosure obligation. This is likely to require additional compliance assessments, particularly for internationally active consultancy firms.
In addition, companies will need to adapt their internal documentation processes in order to identify all relevant mandates in good time and to include the necessary information in the invitation to the Annual General Meeting.
Although the Federal Council estimates that the additional workload will remain manageable, the new regulation is likely to significantly raise awareness of potential conflicts of interest.
Conclusion
The preliminary draft does not seek to fundamentally overhaul Swiss company law. Rather, it adopts a targeted approach to transparency. In future, shareholders should be able to ascertain whether companies influencing their voting decisions have simultaneously acted on behalf of the company in question.
In doing so, the Federal Council is responding to a debate that has been ongoing for years regarding the role of proxy advisory firms and is aligning itself with international developments, without comprehensively regulating the activities of these firms. Should the bill come into force, boards of directors will have to supplement their corporate governance processes with additional transparency obligations. For shareholders, this means a better basis for assessing the independence of proxy advice and for exercising their voting rights in an informed manner.
Sources
- Federal Council press release of 13 May 2026, Company Law: Greater transparency in proxy advisory services
- Amendment to the Swiss Code of Obligations (Proxy Advisers), Explanatory Report on the launch of the consultation process
- Swiss Code of Obligations (Voting Rights Advisers), Preliminary Draft
- Motion 19.4122 Minder