SWITZERLAND Law and Practice Contributed by: Nicolas Béguin, Joseph Merhai, Thomas Pasquier and Benjamin Vignieu, Aegis
• have only limited marketability; • are subject to strong price fluctuations; • exhibit limited risk diversification; and • are difficult to value (Article 69, para 2 CISA). Such funds are characterised by investments, structure, investment techniques (short-selling, borrowing of funds, etc) and investment restric - tions that exhibit a risk profile that is typical for alternative investments (Article 71, para 1 CISA). LPCIs can invest in risk capital, construction, real estate, infrastructure projects, alternative invest - ments, other investments and a mixed form of those investments (Articles 120 and 121 CISO). SICAFs may invest in the same asset classes authorised for other funds for alternative invest- ments (Article 115, para 2 CISA). For other types of funds, please see 3.3.1 Regu- latory Regime . 2.3.2 Requirements for Non-Local Service Providers Fund management companies, SICAVs, LPCIs, SICAFs and managers of collective assets of Swiss AIFs must apply for authorisation with FINMA and are subject to its prudential supervi - sion (Article 5, para 1 FinIA and Article 13, para 2 CISA). Only Swiss banks authorised by FINMA can act as custodian bank of a Swiss AIF (Article 72, para 1 CISA). Swiss AIFs shall have their head office and effec - tive place of management in Switzerland. Tasks may be delegated solely to third parties that pos - sess the necessary skills, knowledge and experi - ence, and that have the required authorisations (Article 14, para 1 FinIA). FINMA may subject the delegation of investment decisions to an asset manager located abroad to an agreement on co-
operation and information exchange between FINMA and the competent foreign supervisory authority, particularly if such an agreement is required under the other country’s legislation (Article 14, para 2 FinIA). 2.3.3 Local Regulatory Requirements for Non- Local Managers As Swiss AIFs must have their head office and effective place of management in Switzerland (see 2.3.2 Requirements for Non-Local Service Providers ), non-Swiss domiciled managers can - not manage AIFs domiciled in Switzerland. Please see 2.3.2 Requirements for Non-Local Service Providers regarding the delegation of investment decisions. 2.3.4 Regulatory Approval Process The authorisation and approval process general - ly involves a preliminary discussion with FINMA, followed by a formal application. FINMA aims to grant approval within two months from the date it receives a complete filing (see notably Article 17 CISO). The duration of the process depends on the complexity of the fund, its investment strategy and the investors targeted. In practice, however, the regulatory approval process may take longer, often exceeding six months. 2.3.5 Rules Concerning Pre-Marketing of Alternative Funds If the pre-marketing activity is aimed at acquisi - tion or disposal, or takes the form of the pro - vision of personal recommendations on trans - actions relating to units in AIFs, it triggers the application of the requirements set forth under FinSA (see 2.3.6 Rules Concerning Marketing of Alternative Funds ).
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