SWITZERLAND Law and Practice Contributed by: Nicolas Béguin, Joseph Merhai, Thomas Pasquier and Benjamin Vignieu, Aegis
cle 112 LPCC). A share in a SICAF must be fully paid-up (Article 113, para 1 CISA). The SICAF is authorised to make investments that: • have only limited access to the market; • are subject to significant price fluctuations; • involve limited risk spreading; or • are difficult to value (Article 69, para 2 CISA cum Article 115, para 2 CISA). Like SICAVs, SICAFs must obtain both prior authorisation as a subject (Article 13, para 2, lit d CISA) and prior approval as a product (Article 15, para 1, lit d CISA) from FINMA. To date, the SICAF has remained no more than a theoretical vehicle that has fallen out of favour with fund promoters, mainly for tax reasons and because of the burden of its regulatory regime. L-QIF Created on the basis of the Restricted Alterna - tive Investment Funds (RAIFs) that have recently developed extensively in Luxembourg, the Lim - ited Qualified Investor Fund (L-QIF) is a CIS that is: • exclusively reserved for qualified investors; • administered by certain Swiss regulated enti - ties; and • not subject to authorisation, approval or supervision by FINMA. The L-QIF may be an open or closed-ended CIS. It is not a new legal form of CIS, since it can only take the form of some existing Swiss CIS – ie, a contractual investment fund, a SICAV or an LPCI (Article 118c CISA). The form of a SICAF is excluded.
In principle, the provisions of CISA apply to L-QIFs, with a number of important exceptions, including provisions governing the obligation to obtain authorisation or approval from FINMA and the obligation to be subject to FINMA supervi - sion. L-QIFs are also not subject to the obliga - tion to publish a prospectus. The absence of FINMA supervision is compen - sated above all by the auditing of the L-QIF by an auditing company approved by FINMA on the one hand, and by the special requirements imposed on the administration of the L-QIF, which will have to be carried out by specific insti - tutions subject to FINMA supervision (indirect supervision), on the other. In general, an L-QIF is managed by a fund management company but, depending on the type of L-QIF and legal requirements, management and investment decisions can be (sub)delegated to other regu - lated entities (such as a manager of collective assets or a foreign manager of collective assets). L-QIFs benefit from a high degree of freedom in terms of investment regulations, risk diversifi - cation and permitted investments (Article 118d CISA). Such freedom enables L-QIFs to proceed to traditional investments as well as alternative ones. If an L-QIF invests in alternative invest - ments, reference must be made to the particular risks associated with these investments in the designation, in the relevant documents (fund contract, the investment regulations or the part - nership agreement) and in the advertising mate - rial. In the case of L-QIFs in the legal form of a contractual fund or SICAV, the risk notice must take the form of a warning clause that briefly and concisely describes the main risks associ - ated with the potential investments. The warning clause must be included on the first page of the fund contract or the investment regulations and in the advertising documents.
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