1 Regulatory Framework
1.1 What legislation governs the establishment and operation of Alternative Investment Funds?
The establishment and operation of Alternative Investment Funds ("AIFs") (and their managers) is governed by the Federal Act on Collective Investment Schemes of 23 June 2006 ("CISA", SR 951.31) and its implementing ordinances, Ordinance on Collective Investment Schemes of 22 November 2006 (CISO, SR 951.311), the Ordinance of the Swiss Financial Market Supervisory Authority on Collective Investment Schemes of 27 August 2014 ("CISOFINMA", SR 951.312) and the Ordinance of the Swiss Financial Market Supervisory Authority on Collective Investment Schemes of 6 December 2012 ("CISIO-FINMA", SR 951.315.2). In addition, the Swiss Financial Market Supervisory Authority ("FINMA") has published a number of circulars addressing specific areas of collective investment schemes law (such as the distribution of collective investment schemes). Finally, a number of guidelines of the Swiss Funds / Asset Management Association ("SFAMA") have been recognised as a minimum standard by FINMA and apply to all institutions regardless of SFAMA membership.
Investment companies that are incorporated as a Swiss corporation and that are either listed on a Swiss stock exchange or restricted to qualified investors (within the meaning of the CISA) do not fall within the scope of the CISA. Accordingly, the establishment and the operation of investment companies are governed by Swiss corporate law and, in the case of a listed company, the listing rules and any additional regulations of the stock exchange.
1.2 Are managers or advisers to Alternative Investment Funds required to be licensed, authorised or regulated by a regulatory body?
Subject to limited de minimis exemptions provided in the CISA for asset manager of foreign collective investment schemes, asset managers to AIFs have to obtain a licence from FINMA prior to engaging in asset management activities for AIFs. The licensing requirement applies to asset managers of Swiss and foreign collective investment schemes. The licence is subject to specific licence requirements that include, inter alia, minimum capital requirements and rules regarding the organisation and the operation of the asset manager.
Investment advisors of AIFs which provide only advisory activities, without any authority to execute orders, do not need a licence from FINMA.
1.3 Are Alternative Investment Funds themselves required to be licensed, authorised or regulated by a regulatory body?
As a matter of principle, four types of vehicles are available to set up an alternative investment fund in Switzerland: (i) a contractual collective investment scheme; (ii) a corporate collective investment scheme with a variable capital (SICAV); (iii) a limited partnership for collective investments; and (iv) an investment company.
As a matter of principle, all Swiss AIFs require a licence from FINMA irrespective or their organisational structure (whether established contractually or as a company) and the type of investors. CISA provides that investment companies organised as a company limited by shares are out of the scope of the act, provided that (a) all their shareholders are qualified investors, or (b) they are listed on a Swiss stock exchange.
AIFs organised under a foreign law are subject to a licensing requirement only if they are distributed to non-qualified investors. By contrast, there are no licensing requirements for foreign AIFs that are exclusively distributed to qualified investors. However, Swiss rules on distribution apply (see below section 3).
1.4 Does the regulatory regime distinguish between openended and closed-ended Alternative Investment Funds (or otherwise differentiate between different types of funds or strategies (e.g. private equity v hedge)) and, if so, how?
The CISA provides four different investment vehicles for structuring Swiss collective investment schemes. The four structures are divided into open-end and closed-end collective investment schemes. Openend collective investment schemes entitle investors to request the fund or a related party to redeem of their units at their net asset value at regular intervals. Closed-end investment schemes exclude this right. The CISA provides for two types of open-end collective investment schemes: the contractual investment fund; and the investment company with variable capital (Société d'investissement à capital variable; "SICAV"). The contractual investment fund and the SICAV constitute two open-ended investment vehicles and are largely interchangeable. They allow for a broad category of structures, ranging from securities funds which are based on the EU-UCITS standard, to real estate funds, so-called other funds for traditional investments and so-called other funds for alternative investments.
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