I. Background

Proxy advisors are firms providing paid services to shareholders (primarily institutional investors) by analyzing company data and issuing voting recommendations. Their influence is significant: according to SWIPRA's estimates for 2023, ISS influenced approximately 23% of votes cast at Swiss annual general meetings, Glass Lewis around 14%, and Ethos around 13%. Globally, the market is a virtual duopoly: it is widely acknowledged that ISS and Glass Lewis account for in excess of 90% of the market for proxy voting recommendations.

Despite this market influence and the many challenges facing the proxy advisory market, proxy advisory activities are currently unregulated under Swiss law. No statutory provisions govern conflicts of interest, and only voluntary self-regulation applies, which contrasts with Switzerland's neighbors, all of which have enacted binding rules. In particular, EU member states have been required since 2019 to implement the transparency obligations contained in the Shareholders' Rights Directive II (Directive (EU) 2017/828). An OECD peer review published on October 13, 2025 confirmed that 60% of surveyed jurisdictions now maintain statutory or regulatory frameworks for proxy advisors.

II. Regulatory Approach and Scope

After examining and rejecting three alternative approaches (standalone special legislation, incorporation into financial markets law, and self-regulation) the Federal Council concluded that a targeted amendment to the CO offered the most effective and proportionate solution.

The proposed regime is deliberately narrow. It does not seek to comprehensively regulate proxy advisory activity (as the EU Directive does), nor does it impose prohibitions on proxy advisors or companies. It does not extend transparency obligations to institutional investors. Its sole focus is the disclosure of situations in which a proxy advisor serves both a company and its shareholders.

The new provisions (proposed articles 700 and 700a CO) apply to all Swiss corporations (Aktiengesellschaften; sociétés anonymes), irrespective of whether they are listed.

III. The Proposed Transparency Obligation

Trigger

The transparency obligation arises whenever a Swiss corporation (or a member of its group) has engaged a proxy advisory firm during the current or preceding financial year. The draft defines proxy advisory services as the professional analysis of company data and related research undertaken to inform and advise shareholders on their decision-making and issue voting recommendations.

Content of Disclosure

The board of directors must include in the convening notice of the general meeting: (a) the name and registered office of the proxy advisory firm; and (b) a description of the services rendered. A general reference such as "advice on the design of the executive remuneration system" would satisfy the disclosure requirement.

If the board has engaged the services of a proxy advisory firm after the notice convening a general meeting of the shareholders, it is required to provide the information set out above at the meeting.

Opt-Out

The board may dispense with disclosure if the proxy advisory firm provides written confirmation that it has issued no voting recommendation on any item on the agenda of the general meeting.

IV. Consequences of Non-Compliance

The draft does not introduce any new administrative sanctions or supervisory authority. Non-compliance operates through existing corporate law mechanisms, including potential liability of directors and officers to the extent that undisclosed conflicts of interest cause a damage to the company, its shareholders, or creditors and a potential challenge of the resolutions adopted at the general meeting.

V. Next Steps and Preliminary Recommendations

The consultation period runs until September 4, 2026. Entry into force is subject to parliamentary review and the ordinary legislative process. Accordingly, no date has been set.

In practice and in our experience, when a Swiss publicly traded company needs help designing its governance framework, executive compensation, or preparing for shareholder engagement, it typically does not engage a proxy advisor as its primary advisors. The market is dominated by executive compensation consultants and governance advisors with the required depth of expertise.

In addition, ISS has formal conflict-of-interest policies that restrict or disclose advisory work performed for companies whose shareholders it simultaneously advises. Glass Lewis has historically taken an even harder line, generally not offering corporate advisory services at all.

Accordingly, sophisticated Swiss publicly traded companies only use ISS Corporate Solutions defensively and narrowly — to model specific proposal scoring — rather than as a primary governance architect.

When they do so, they will now be required to disclose using ISS Corporate Solutions in their convening notice. In this connection, companies and their boards will need to keep track of whether they or any group company have retained proxy advisory services in the current or preceding financial year.