SWITZERLAND Law and Practice Contributed by: Nicolas Béguin, Joseph Merhai, Thomas Pasquier and Benjamin Vignieu, Aegis
collective assets. This is justified by the invest - ments that LPCI are required to make – ie, in principle highly illiquid investments. Introducing an unconditional redemption right for investors, as is the case for contractual investment funds and SICAVs, would jeopardise the long-term future of the LPCI and would be completely at odds with its investment objectives. A maximum term is typically for the partnership agreement (Article 102, para 1, lit e LPCC), to avoid having investors indefinitely locked into the vehicle. An LPCI involves three parties: the promoter, the partner with unlimited liability and the lim - ited partners. • The promoter of the LPCI is the shareholder (direct or indirect) of the limited company ( société anonym ; Aktiengesellschaft ) acting as a partner with unlimited liability. They will gen - erally invest alongside the investors (Article 119, para 3 CISO). • The unlimited partner (also named “partner with unlimited liability” or “general partner”) must be incorporated as a limited company ( société anonyme Aktiengesellschaft ) under Swiss law (Article 98, para 2 CISA) and have paid-up share capital of at least CHF100,000 (Article 118, para 2 CISO). The unlimited partner is responsible for the management of the LPCI (Article 599 CO) and represents it in dealings with third parties. • Limited partners are the investors in the LPCI. They play a passive role in the LPCI and are only liable up to a certain amount, known as the “ • commandite ” (Article 98, para 1, phr LPCC and Article 608, para 1 CO). Given the sig - nificant risks and financial commitments inherent in investments in hedge funds and private equity, limited partners must be quali -
fied investors within the meaning of Article 10, para 3 or 3ter of CISA (Article 98, para 3 CISA), which in turn refers to Article 4, paras 3 to 5 and Article 5, paras 1 and 4 of FinSA. Unlike contractual investment funds and SICAVs, LPCIs are not required to engage a custodian bank due to the nature of their invest - ments. However, an LPCI may utilise custody and payment services if the partnership agree - ment explicitly so provides (Article 102, para 1, lit j CISA). The economic rights conferred by an LPCI unit are set out in the partnership agreement. However, investors in an LPCI are not limited to property rights alone. They may – and often will – have certain pecuniary obligations stipulated in the partnership agreement. These obligations may include making additional investments (capital contribution obligations) or repaying a portion of the profits in predefined circumstanc - es (claw-backs). The participation rights of the limited partner are limited. The limited partner does not have the right to manage the company’s affairs (Arti - cle 600, para 1 CO). Moreover, they have no means of objecting to management actions that fall within the scope of the company’s ordinary operations (Article 600, para 2 CO) and have only very limited rights of information and control (Article 601, para 3 CO and Article 106 CISA). SICAF The SICAF is a non-listed Swiss limited com - pany within the meaning of Article 620 et seq of the CO. Its shareholders are not necessarily qualified shareholders and its sole purpose is collective investment (Article 110, para 1 CISA). The SICAF is essentially governed by the provi - sions relating to public limited companies (Arti -
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