SCANNING 7

What’s in there?

have the potential to trigger such a reliance. As a result, the Opinion modifies certain provisions of the Guidelines with respect to the assessment of the credit quality of money market instruments and explains how national competent authorities should apply the modifications.

and the Basel Committee on Banking Supervision (“BSBS”). The circular came into force on 1 July 2013, with the exception of certain provisions which only ap- plied from 1 January 2014. What’s in there? On 24 November 2014, the CSSF issued an amend- ing circular (Circular 14/597) updating certain parts of the 12/552 Circular. A new chapter, Chapter 6, was added to Part III (“Specific requirements concerning risk manage- ment”) of the Circular. This chapter addresses the Recommendation of the European Systemic Risk Board (the “ESRB”) on funding credit institutions (ESRB/2012/2), and implements the B recommen- dation, which provides for the establishment of a general framework for risk management of asset encumbrance. Furthermore, some clarifications were made to points 72 and 182 of the Circular. These consist in only a minor wording change for the former point, and a material change concerning the outsourcing of a material activity by an institution in the latter point. According to the amendment, the institution outsourcing a material activity needs to obtain prior authorisation from the CSSF and must use a Lux- embourgish credit institution or a PFS support. The amendments made to the CSSF Circular 12/552 entered into force with effect from 31 De- cember 2014. SWITZERLAND Corporate Law Reform - Adaptation to market developments Background On 28 November 2014 the Swiss Federal Council presented a preliminary draft of the corporate law reform and started the consultation procedure. The aim is to improve the corporate law and adapt it to the reality of the market, particularly by imple- menting measures in the Swiss Law against ex- cessive remunerations, and provisions making the commodities sector more transparent. THE CSSF CIRCULAR 14/597 IS AVAILABLE HERE.

The main proposals are: 1. Implementation of the Ordinance against Exces- sive Compensation in Public Companies into the Swiss Code of Obligations with certain more severe rules, e.g., an exclusion of prospective say-on-pay votes (i.e. budget votes) meaning the shareholders are to vote on variable compensation only after the annuals accounts become available; 2. A target gender quota of 30% for the board of directors and the executive committee of publicly listed companies based on a «comply or explain» approach. In case those companies do not achieve the target quota after a transition period of five years, they must explain in the compensation re- port the reasons for the underrepresentation and the actions undertaken to promote diversity in their corporate bodies; 3. An obligation for major companies in the ex- ploitation of natural resources industry to disclose payments made to public authorities: in accordance with the EU Directives 2013/34 and 2013/50 con- cerning transparency obligations for companies ex- ploiting natural resources, the draft requires those companies to disclose payments exceeding CHF 120,000. 4. Numerous changes in «traditional» corporate law, such as the permissibility of a share capital denominated in foreign currency, a minimum par value below one cent, a «capital band» to give com- panies more flexibility to increase and reduce their share capital within an upper and lower limit, clar- ification of the requirements for distributions out of the capital reserves and interim dividends, and the enhancement of shareholders’ rights; What’s next? The consultation period runs until 15 March 2015. The date of enactment is still uncertain and not to be expected before 2017.

The Opinion is available here.

What’s in there? On 2 December 2014, the Commission de Surveil- lance du Secteur Financier (the “CSSF”) published Circular 14/598 (the “Circular”) in order to imple- ment the amendments to the Guidelines into Lux- embourg law. Circular 14/598 accordingly implements the follow- ing into Luxembourg law: « Paragraph 4 of Box 2 of the Opinion, concerning short-term money market fund; « Paragraph 2 of Box 3, concerning money market funds; The above paragraphs specify that management companies (or self-managed investment compa- nies) must undertake their own documented as- sessment allowing them to determine if the money market instrument is of high quality. Update of CSSF Circular 12/552 relating to the central administration, internal governance and risk management Background CSSF Circular 12/552 relating to the central admin- istration, internal governance and risk management (“the Circular”), issued on 11 December 2012, rep- resented a first step towards a consolidated rule- book on internal governance in the broad sense, and aligned the existing circulars and guidelines published by the European Banking Authority (EBA) THE CSSF CIRCULAR IS AVAILABLE HERE. The Circular enters into force with immediate effect.

Scanning - January 2015 - page 9