Swiss law provides for key management duties, such as overall management of the company, determination of the company’s organization, appointment and dismissal of the management, which duties fall into the sole competence of a company’s board of directors and cannot otherwise be delegated. Depending on the financial sponsor’s strategy, the sponsor can keep the existing board of directors as a whole or just to some extent while additionally electing its own members. Alternatively, it can replace the board in its entirety. Generally, however, a financial sponsor keeps (some or all of) the already existing board members of the portfolio company and elects own board members, including the chairman of the board of directors, as the latter has the casting vote (unless excluded in the articles of association). By means of such additional elections, a financial sponsor ensures its control over material business decisions.
When the company’s business management is delegated to individual board members or senior management, the company has to issue organizational rules. Typically, the organizational regulations set out rules for managements’ duties and reporting obligations, and form part of the common documents that regulate the company’s governance. Additionally, important governance matters can be included in the articles of association, which are, however, accessible to the public.
Where a portfolio is not fully owned by the same financial sponsor, governance matters, including veto rights for the benefit of minority shareholders, are included in the shareholders’ agreement.