SWITZERLAND Law and Practice Contributed by: Jürg Frick, Luca Dal Molin, Philippe Gobet and Carla Bertossa, Homburger
L-QIF Since the entry into force of the amended CISA on 1 March 2024, Swiss fund management companies may take advantage of the L-QIF regime and establish con - tractual funds, SICAVs or limited partnerships for col - lective investments under this regime without having to obtain prior approval or authorisation from FINMA. At the time of writing, a total of 27 L-QIFs (previous year: 5) are listed in the directory of registered L-QIFs. It will be of interest to observe the extent to which fund management companies continue to make use of this opportunity in the future, and to analyse the impact it will have on the market for AIFs in Switzerland. Promoters/sponsors of AIFs could come from all over the world. In practice, however, the majority come from Switzerland’s neighbouring countries or, when from further afield, primarily from the United States or Nordic countries. The main reasons for this are Swit - zerland’s: • stable political and economic environment; • favourable tax regime; • highly developed financial ecosystem; • robust legal and regulatory framework; • access to a wealthy investor base; and • high living standards, including excellent educa - tional and healthcare systems. These factors make Switzerland an attractive location for asset managers seeking a stable, efficient, and well-regulated base for their global operations. 3.2 Legal Structures Used by Managers 3. Fund Managers 3.1 Origin of Promoters/Sponsors of Alternative Funds It is standard practice for asset managers to estab - lish a Swiss corporation, typically as a subsidiary of a foreign asset management entity. A key factor driving this structure is the individual personnel compensa - tion and equity incentive arrangements, along with the associated taxation. Switzerland’s relatively favoura - ble tax regime for certain forms of equity participation and profit-sharing makes it attractive for fund manag - ers to structure compensation packages that incentiv -
ise long-term performance. These arrangements are usually supported by tax rulings. 3.3 Regulatory Regime for Managers Swiss managers of collective assets and Swiss fund management companies must be authorised as such by FINMA and are subject to its ongoing pruden - tial supervision. Authorisation is granted only if the requirements of FinIA/FinIO are met, including those relating to organisation, risk management, business conduct, minimum capital, capital adequacy, and own funds. Managers of AIFs restricted to qualified investors that do not meet certain de minimis requirements to qualify as managers of collective assets (AUM ≤ CHF100 million (including assets acquired through leveraged financial instruments) or AUM ≤ CHF500 million (excluding leveraged financial instruments)) require authorisation as portfolio managers. In this case, ongoing supervision is carried out by a FINMA- approved supervisory organisation. In order to protect the interests of investors and the fund, managers of collective investment schemes (including AIFs) owe a fiduciary duty of loyalty and due diligence. In addition, they are subject to a duty of disclosure extending to investment risks, fees and costs, compensation received by third parties and membership and creditors’ rights. Information is usu - ally publicly disclosed in marketing materials (pro - spectus, KID), in the fund regulations and/or in annual or semi-annual reports. 3.4 Tax Regime for Managers There is no specific tax regime applying to fund man - agement companies. They are subject to ordinary cor - porate income and capital taxes. 3.5 Rules Concerning Permanent Establishments Funds established outside Switzerland are usually managed by a Swiss legal entity (“Management Com - pany”) without creating a significant permanent estab - lishment risk for the fund. The services of the Manage - ment Company must be remunerated at arm’s length.
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