Startup created, Company or SME running ...
Or BoD - Board of Directors about to be created:
Here are insights & food for thought
The Board of Directors encompasses some basic requirements you should be aware of.
- Legal : It is a legal requirement in most jurisdictions, and is governed by law in Switzerland. The board of Directors has fiduciary duties, which obligate them to act in the best interest of the company that they are appointed to. While in other countries like France or Spain, the BoD has little or no formal liabilities, in Switzerland, it is governed by Law.
... and BOD members maybe held responsible in case of bankruptcy, dissolution or other adverse event that may impact your company. Indeed, Switzerland has one of the most restrictive policies for BoD members, with civil and penal obligations.
All of BOD responsibilities are defined by the Swiss Code of Obligations, Art. 716 a and b + Art. 717 + Art./18. See official articles here
In Switzerland, non-transferable BOD duties are
**quote from the Swiss code of Obligations:**
The board of directors has the following non-transferable and inalienable duties:
1. the overall management of the company and the issuing of all necessary directives;
2. determination of the company’s organisation;
3. the organisation of the accounting, financial control and financial planning systems as required for management of the company;
4. the appointment and dismissal of persons entrusted with managing and representing the company;
5. overall supervision of the persons entrusted with managing the company, in particular with regard to compliance with the law, articles of association, operational regulations and directives;
6. compilation of the annual report and preparation for the general meeting and implementation of its resolutions;
7. notification of the court in the event that the company is overindebted.
2 The board of directors may assign responsibility for preparing and implementing its resolutions or monitoring transactions to committees or individual members. It must ensure appropriate reporting to its members.
**Unquote**
The Swiss Code of Obligations entails that although the management of the company may be delegated to appointed managers (CFO, COO, etc) they remain liable.
Who are usually the appointed BOD members?
Who : Usually members are the founders of the company and a Lead Investor (VC, fund, Business Angels) that come upon a funding round, plus independent board members. Who should be on your board?
- CEO: is likely to be a founder or co-founder, who is in charge of the daily operations of the company
- Directors:
Executive Directors, Non-Executive Directors, and Independent Directors, play different management roles in the company and by virtue of their legal obligations (CH - "Obligations Code", art. 6 to 9), equity stakes, remuneration, have skin on the game
Executive Directors are employed and have Management responsibilities for running the company's daily operations: CEO, CFO, CTO, SEO, COO
Non-Executive Directors are not usually employed but bring knowledge, expertise, and experience to challenge, guide, accompany and monitor Senior Management
Independent Directors provide an external perspective without having direct and daily management roles in the company
BOD members appointment is a hot point during financing rounds.
In the early stage of companies, appointing an ad-interim Board Member to manage all aspects of the financing round might be "the" solution that you are looking for. If you want to know more, contact us at contact@consultiswiss.biz
Attention! In Switzerland, all have BOD members have legal responsibilities and non-transferable duties.
What: BoD members are responsible to act in the best interest of the company. They have a "Duty of Care and Loyalty" Swiss Code of Obligations Art. 717 here
When: 2 aspects here.
a) When are BoD's created and b) when these meet?
a) BoD's are usually setup at the company's inception, or during the financing round.
b) BoD's meetings shall have a legal format, shall be documented, minuted and serve as guidance to the management of the company / startup. SWISS LAW
Frequency of BoD meetings may vary from quarterly to monthly, to weekly (in case of crisis) or even daily (in case of filling for bankruptcy, when the BOD takes back the management of the company) and regardless of the topic discussed should always have an angle of :
- Reporting: what have we achieved until now, and what are the company's perspectives. Are we aligned with our targets?
- Strategy: What is our Mission and Vision and where are we as compared to our plans? What actions need to be taken to adapt?
-Leadership: how good are we to deliver professional development to our team and... ultimately bring success to the company?
Remember: BOD members are personally and individually liable...
1. BoD's are ultimately responsible for the company's run - at least in Switzerland.
2. In the case of a severe crisis, you must be able to mobilize your BoD and have them meet weekly or even daily (yes, it could happen) to supervise and participate to the startup's daily activities (e.g.: in the case of filling for bankruptcy, supervise all expenses, all salary payments, social insurance payments, etc.),
Ad-interim Board Members (6 months to 1 year) is an option when you know that your company will undergo several financing rounds, and among others it will help you keep a fresh look to the company's best interests, and not that of the shareholders'.
Ad-interim Management such as COO roles, or Board Members, is the ideal solution when you are running out of time and need to setup an operational team that can deliver right away.
Again, there is no magic: you must feel it with your guts. You have to feel that you will miss out if you don't work with this particular person. Else, do not engage, you could regret it down the road... and the road of startups can be a long one :-)
Advisory Board
According to Wikipedia:
**quote**
An advisory board is a body that provides non-binding strategic advice to the management of a corporation, organization, or foundation. The informal nature of an advisory board gives greater flexibility in structure and management compared to the board of directors.
Unlike the board of directors, the advisory board does not have authority to vote on corporate matters or bear legal fiduciary responsibilities. Many new or small businesses choose to have advisory boards in order to benefit from the knowledge of others, without the expense or formality of the board of directors.
**unquote**
In the case of SME's and Startups, you may look to appoint an Advisory Board to have a different angle and specialists views on your business activities.
For additional insights on BOD and Interim Management positions and how we can support you there: contact@ConsultiSwiss.biz