Following the refusal of the initiative on responsible corporations, the parliament’s counter-project entered into force in January 2022 through an amendment of the Swiss Code of obligations.
Listed companies, financial institutions and businesses with at least 500 employees and over CHF 20 millions in assets or CHF 40 millions in sales volume are subject to these new disclosure rules.
Impacted companies must publish a yearly report, which includes the following information:
- Description of the business model
- Description of the risk-management concept and due diligence
- Identification of relevant risks across the supply chain
- Risk impact assessment, risk avoidance and risk mitigating measures
- Description of KPIs
The report targets specifically environmental, social, human rights and corruption matters and must be published the first time in 2024 for the year 2023.
Furthermore, companies that already disclose their non-financial information in accordance with a disclosure standard such as the OECD Guidelines for Multinationals, are not meant to disclose a separate reportif the standard covers the legal minimum.
Switzerland has in this way chosen to follow the path laid by the European Union in order to incentivise companies to improve their CSR practices. Our Team is at your disposal shall you need any assistance in this regard.
In addition, we will be sharing more details on the changes affecting non-financial information disclosure in the future.
In February 2019 the Justitia 4.0 project was kicked-off and followed in November 2020 by the dispatch of the law on a communication platform for judicial institutions.
The project aims to create a nationwide platform used by both federal and cantonal institutions, replacing physical paper used in communication until now.
The parliamentary due process is to start at the end of this year with an entryin to force of the law forecasted for the beginning of 2025. In the meantime, the platform will be deployed with pilot judicial institutions and lawyers for its further development and adaptation. The years 2025 and 2026 will serve as transition period followed by the mandatory use for participants in the judicial process (with exceptions) planned for 2027.
Once the project is implemented, the communication between judicial institutions, lawyers and involved administrative authorities will be in the digital format. Persons not affected by the obligation to use the platform can use it on avoluntary bases.
After the rejection of the E-ID initiative in 2021, a recognised form of electronic identity shall be defined during the development of the project. Furthermore, processual steps with legal registers are not included in the platform.
Even with increasingly digital procedures, it is recommended to keep relevant legal documents in the physical form, should the need to prove their authenticity arise.
As of January 2022, Switzerland will change its reference rate from the LIBOR (London Interbank Offered Rate) to the SARON (Swiss Average Rate Overnight) as the LIBOR will not be further administrated in 2022.
The LIBOR is based on the interest rate on which the banks lend each other money without any collateral. Following the financial crises, almost no bank lends money without a collateral. This situation leads the LIBOR to be hardly based on real transactions but merely on estimations of experts and being therefore less reliable.
As of next year, the SARON will be the reference interest rate for Switzerland. It is derived from effective transactions, more precisely from the interest rates for high quality loans with collateral in Switzerland. With the SARON, the cost of a loan is not known in advance as this reference rate is only calculated and valid until the following day. This way, the cost of a SARON loan cannot be known in advance at the closing. In contrast, the LIBOR was calculated for longer periods and enabled the parties to know the cost of a loan at the closing of the contract.
The level of the SARON should usually be very close to the one of the LIBOR. The change described above should therefore not have a major impact on interest rates of current loans. We however advise individuals or organisations having LIBOR loans maturing after this year to inform themselves on the options available for the transition and to negotiate an amendment to the contract if it does not already include a clause regulating this interest transition.
For most loan contracts, the loan itself is an essential point of the agreement, whereas the interest a modality. Following this circumstance and if an amicable resolution cannot be reached by a failure of negotiations, the judge could amend the contract but not terminate it. Valid cases for termination could be loanswhere the volatility of the Libor is explicitly wanted and considered as anessential term of the contract.
The H&B Law team would be pleased to assist you in any matters related to the above.
As the summer Olympic games in Tokyo are approaching, we would like to dedicate this month’s post to Lausanne, the International Olympic Capital.
Lausanne is known for being home to the International Olympic Committee (IOC) for a century now. Furthermore, the city hosts over 50 international sports federations.
For example the association of IOC recognised international sports federations (Sport Accord) and the International Swimming Federation (FINA) are located in Lausanne.
The third youth Olympic games where held in Lausanne in 2020 making the Olympic Capital an Olympic City.
Finally, the headquarters of the Court of Arbitration for Sports, which rules on most sport related disputes, are also based in Lausanne.
Expected for January 2022, the entry into force of the company law revision will allow companies to proceed to digital general assemblies without physical presence.
The option of a digital general assembly must be specified in the statutes of the company and if the company is listed, the board of directors must appoint an independent representative.
Furthermore, the board of directors has the responsibility to ensure the following:
The participants are identified;
interventions at the assembly are broadcasted live;
all participants have the possibility to issue propositions and participate to the debates;
the result of the votes cannot be falsified.
Companies willing to use this opportunity from the start are recommended to include a provision in their statutes at the next opportunity. According to the commercial register of the canton of Vaud, an early adoption of this right in the statutes should not be verified by the register or be ground for refusal of update. It is already possible to include the option of a digital assembly in the articles of incorporation before the legislative change and will therefore not be rejected by the register.
Unfortunately, the Federal Council did not wish to extend the extraordinary measures against bankruptcy. Nevertheless, there are solutions in the Swiss legal arsenal that can help save a company in the event of temporary financial difficulties.
Thus, the moratorium on debt restructuring aims to gain time for a sustainable reorganisation while guaranteeing the company's continuation. The debt-restructuring moratorium or the creation of a successor company are also interesting tools in certain cases.
If bankruptcy is unavoidable, it is important to prepare for it in advance in order to avoid liability claims and even criminal sanctions. H&B Law will assist and advise you in this process.
H&BLaw is pleased to announce that its partner Marc Häsler has been recognized as a leading lawyer in franchise matters in the Who’s Who Legal 2021 edition.
On March 7, 2021 the Swiss population is called to vote on the economic partnership agreement between the EFTA-States and Indonesia.
Indonesia is, according to the department of foreign affairs, the third economic partner of Switzerland in South East Asia with more than 150 Swiss companies operating in this market and a strong potential for growth.
Among other objectives, the agreement strives to liberalize the trade of goods and services in a way to contribute to the objectives of sustainable development.
In the context of palm oil, the parties integrated a sustainable management of the vegetable oils sector and associated trade clause to the agreement. The parties commit to «effectively apply laws, policies and practices aiming at protecting primary forests (...), halting deforestation, peat drainage and fire clearing in land preparation (...).». Furthermore, a unilateral ordinance by the Swiss government is in preparation and will require sustainability certificates in order for palm oil to benefit from the agreement.
An interesting fact about palm oil and why it is widely used is its efficiency. According to the WWF's website, to produce the same amount of alternative oils a surface of land 4 to 10 times greater would be needed.
H&B Law participated on January 20, 2022 to the webinar hosted by SwissCham China and was joined by speakers from Intep Integrale Planung GmbH. We could deliver a presentation on the current trends in sustainability disclosure. The presentation gave an overview on the current trends insustainability disclosure regulations at a global, European, and local (Switzerland & China) scale. It is recognized that most voluntary frameworks are turning increasingly mandatory and new regulations are being issued in order to redirect capital flows towards sustainable activities. Furthermore, besides information disclosure, company certification is gaining in importance.
The speakers were: Marc Häsler, Claude-Alain Boillat and Vincent Glauser.
› Download the presentation in PDF
For our final post on China this year, we would like to illustrate two developments in connexion with the implementation of the e-yuan by the People's Bank of China as this topic is currently widely debated.
Today, as inflation tendencies reappear, the debate on central bank policies such as quantitative easing, having an impact on the whole economy, are brought to the fore. In such context, the wide use of a digital currency in China will enable the analysis of data to identify areas, sectors or activities in difficulty and to apply targeted economic policies. This would allow the central bank and government to invigorate economic activities in targeted zones, having thereby a local impact and avoiding unwanted repercussions on the whole economic system, which would be the case with broad macro-economic policies.
Secondly, the use of a digitalcurrency in the retail business would mostly bypass business models such as credit card services and therefore lower the fees per transaction as well. This would be a potentially favourable development for consumers, as the money is directly transferred from the central bank, thereby avoiding any intermediary.
Both options have advantages and drawbacks. The purpose of this post is to deliver a short outlook on what might be expected in the future.
As of November 1, 2021 the Personal Information Protection Law (PIPL) entered into force in China. This law has an extraterritorial reach similar to the EU's General Data Protection Regulation and is therefore applicable to companies providing services or selling products in China, eventhough they are processing personal data abroad. The PIPL applies to personal information as soon as a person is identifiable and the collection as well as the storage already suffice to fall under its scope. Entities exporting personal data must inform and obtain the approval of the concerned person and overseas entities recipient of the data must satisfy certain personal information protection standards. A non-compliance with the PIPL can result to monetary sanctions and the company being placed on a governmental blacklist.
Foreign companies with activities in China, with or without physical presence in the country should therefore ensure that their activities are conform to the new law.
As the Chinese government plans to raise taxes on high-income individuals and foster redistribution, we would like to dedicate this monthly post to the demographics and economic development of the country.
Currently (2020), the population of China is estimated to reach 1.4 billion according to the World Bank. This is slightly more than double the population China had in 1960. Furthermore, China’s middle class rose particularly fast after the year 2000, representing today more than half of the population. This evolution was followed along by a significant migration towards the cities. Today commonly referred as first tier cities, Beijing, Shanghai, Guangzhou and Shenzhen are joined for example by non-coastal cities as Chengdu, Chongqing, Hangzhou and Wuhan.
The whole evolution was simultaneous with large investments in infrastructure and logistics, which are currently still taking place to connect and increase mobility between the different parts of the country. The example “par excellence” often referred to is the construction of a high-speed rail network of more than 35’000 km throughout the country.
Macro-economically, China has seen a trend showing an increase in the importance of services contributing in 2020 for almost 55% of GDP whereas the industrial sector accounted for a little more than 35% of GDP. China follows currently, in the context of the 14th Five Year Plan (2021-2025) and the country’s long-range goals through 2035, the strategy to become technologically independent, focusing its efforts on innovation as well as new technologies for its further development.
As the public discussion in Switzerland around a central bank issuing digital currency tends to the negative, China is moving forward with the implementation of the digital yuan.
The implementation of the e-yuan by the People’s Bank of China is indeed advancing at a fast pace. Today, as part of the test phase, individuals in China can already use the digital currency in all-day payments through an app. The cities of Beijing and Suzhou are at the centre of the test phase. Foreign athletes during the winter Olympics in 2022 should also be able to use the digital currency. There is however no official timeline for the implementation of China’s digital currency.
The e-yuan should in the future also play a role in international payments, granting in that way China with more independence from the US-Dollar based payment system.
According to Mrs. Shumei Wang, Chief Judge of the Supreme People’s Courts No 4 Civil Division, courts nationwide have seen the number of foreign-related cases grow rapidly. Chinese courts heard 22,330 of such disputes last year, up 3 percent year-on-year. In such context, Beijing courts need to strengthen their capacity to deal with foreign-related affairs as the city is the country’s international exchange center and the establishment of the two zones brings about new and higher requirements for the judiciary in this area.
Foreign mediators are expected to participate in dispute resolution in Beijing courts to improve the judiciary’s capacity to handle foreign-related affairs. This move was highlighted in a guideline issued by the top court to facilitate the construction of Beijing’s pilot free trade zone and demonstration zone for further opening up the services sector. A focus on building a foreign-related legal system was also written into the recently adopted Outline of the 14th Five Year Plan.
Finally, Beijing will also increase protection of data property and personal information, with more research on new issues regarding big data transactions.
These expected steps undeniably improve trade relation with China through an overall strengthening of the legal system for foreign companies.
The 14th Five-Year Plan period is the first five-year period after China achieved its centennial objective of establishing a well-off society in an all-round way. Proposal for this Plan supports Hong Kong to be an international legal and dispute resolution center in the Asia Pacific region.
According to Mrs Teresa Cheng, Hong Kong's Secretary for Justice, the Department of Justice (DoJ) has been liaising with the relevant Chinese mainland authorities, striving to implement more liberalization measures and new initiatives in the Greater Bay Area (GBA).
This will enhance cooperation on issues relating to legal and dispute resolution services in civil and commercial matters, as well as to promote collaboration with international and regional bodies.
Two recent major breakthroughs which would facilitate the promotion of the services in the GBA include the "GBA Legal Professional Examination" and "Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region".
Hong Kong has the opportunity to consolidate and enhance its role and positioning in the 14th Five-Year Plan, for the benefits of the GBA, as well as the whole country.
In 2009, China and Switzerland signed a comprehensive agreement on investment followed by a free trade agreement in 2013.
This enabled growth in both imports and exports of goods as well as an increase in company shareholdings.
On December 30th, 2020 China and the European Union signed a comprehensive agreement on investment going further than the Swiss agreement by including the market for cloud-services.
A further sign from China for market opening.