SWITZERLAND Law and Practice Contributed by: Jürg Frick, Luca Dal Molin, Philippe Gobet and Carla Bertossa, Homburger
Investment Limitations AIFs in Switzerland may be subject to specific invest - ment limitations based on their structuring: • Open-ended AIFs, such as contractual funds (FCPs) and investment companies with variable capital (SICAVs), must adhere to principles of risk diversification. Depending on the type of open- ended fund (securities funds, real estate funds or “other funds”), leverage limits and other investment restrictions apply. For instance, “other funds for alternative investments” may leverage up to 600% of their net assets, borrow up to 50% of their net assets, and engage in short-selling. These funds must explicitly state their investment restrictions and the nature and extent of permissible short sell - ing in their fund regulations. • Closed-ended AIFs, like LPCIs and investment companies with fixed capital (SICAFs), are not sub - ject by law to any investment limitations. However, the fund regulations may provide for such restric - tions. Regulatory Authorisation and Approval In principle, the establishment and operation of an AIF and the management of its assets require authorisa - tion from FINMA, which must also approve the fund regulations. The authorisation and approval process typically involves a preliminary discussion with FIN - MA, followed by a detailed application. The duration of this process varies from case to case, depending in particular on the complexity of the fund and the completeness of the application. In general, it takes between three and six months. For AIFs open to all investors, FINMA aims to approve within eight weeks, while AIFs restricted to qualified investors may receive approval within four weeks. However, these time - frames are indicative rather than mandatory and only start to run once FINMA has determined that the filing documents are complete. Foreign AIFs do not require regulatory approval, as long as they are only offered to qualified investors. The offering of foreign AIFs to non-qualified (retail) inves - tors is subject to approval by FINMA (see also 4.4 Rules Concerning Marketing of Alternative Funds ).
AIFs in the form of an L-QIF do not require FINMA authorisation or approval and are not supervised by FINMA. The same applies to investment companies organised strictly under private law. 2.3 Disclosure/Reporting Requirements Prospectus and Key Information Document (KID) Open-ended AIFs Open-ended AIFs (FCPs and SICAVs) must produce and publish a prospectus when offering to the public. The minimum content of the prospectus is set out in Annex 6 of the FinSO and includes, among other things, the fund’s investment objectives, policy and techniques, permitted investments and investment restrictions, risk factors, rights of investors, compen - sation, costs and fees. The fund regulations are usu - ally also included in the prospectus. AIFs targeting retail investors outside the scope of a portfolio management agreement must further pro - duce a Key Information Document (KID) which con - tains essential information for investors, for example the type and characteristics of the units and their risk/ return profile. The minimum content of the KID can be inferred from the template in Annex 9 of the FinSO. “Other funds for alternative investments” must include a reference to the special risks involved in alternative investments within their prospectus and KID as well as in the fund name and advertising material. Closed-ended AIFs LPCIs must produce a prospectus containing the information in the partnership agreement on invest - ments, investment policy, techniques and restrictions, and risks. SICAFs produce a prospectus analogous to that required for open-ended AIFs. Closed-ended AIFs, like open-ended AIFs, must pro - vide a KID to retail investors. However, since LPCIs are restricted to qualified investors, this generally only applies to SICAFs. Foreign AIFs Foreign AIFs offered in Switzerland to non-qualified investors or high net worth individuals (including pri - vate investment structures set up for them) who have opted to be treated as professional clients under the
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