The requirements for a Board of Directors have increased significantly in recent years, most recently at the beginning of 2023 with the introduction of the new company law. We take a look at the optimal composition and profile of an SME Board of Directors.
Responsibilities and requirements
As the highest supervisory and formative body, the Board of Directors is responsible for the control, management and overall strategic responsibility over a public limited company. Its seven core responsibilities – from the overall management of the company to notifying the judge in the event of over-indebtedness or insolvency – are laid down in the Code of Obligations.
In addition to a high level of motivation, independence, integrity and an awareness of their important responsibilities, Board members should also have sufficient time to devote to the mandate. It is now common practice for the full Board of Directors to meet several times a year for several hours to discuss strategic, operational and administrative issues. There are also specific strategic projects that members can be entrusted with.
With the introduction of the new company law, the requirements for SME Boards of Directors have once again increased significantly. Since 1 January 2023, monitoring liquidity and ensuring solvency have been explicitly included in the obligations of the Board of Directors. We explain these and other reforms in our article on the new company law.
In order for Boards of Directors to fulfil this responsibility, they should regularly review their Board and systematically define competencies and diversity criteria for its composition in consultation with the owners of the company. In order to find the right candidates, it is particularly important for SME Boards of Directors to draw up a profile of requirements for new Board members.
The right combination of skills
A successful Board of Directors combines a variety of competencies, both professionally and methodologically. Ideally, members contribute different but complementary competencies to the Board of Directors in addition to their basic business knowledge and understanding of the respective industry. Depending on the market environment and the life cycle phase of the SME, knowledge in the areas of law, marketing, ITC or corporate governance is required. Financial expertise, however, is an advantage for every member of the Board of Directors.
Targeted diversity
The individuals should not only differ in terms of education and background, but also with their soft skills, personal characteristics and views, as well as their gender and age, resulting in a balanced composition. Furthermore, the Board of Directors of companies that are significantly active outside Switzerland should also include members of another nationality or with many years of international experience. There is no ideal number of members – it depends on the requirements of the respective companies and can be freely chosen.
