SWITZERLAND Law and Practice Contributed by: Marion Bähler, Ramona Wyss, Florian Gunz Niedermann, Fabienne Limacher and Urs Hofer, Walder Wyss Ltd
Each type of fund follows a different set of rules regarding permitted investments, investment restrictions, investment techniques and disclo - sure requirements. According to the FINMA’s current practice, an FCP or SICAV investing more than approximately 20–30% of its total assets in venture capital or other alternative investments needs to be set up as an “other fund for alterna- tive investments” . Closed-end funds may be set up as investment companies with fixed capital (SICAF) or as part - nerships for collective capital investment (LPCI). Since the introduction of SICAFs in 2007, none have been authorised in Switzerland, mainly owing to the unfavourable tax treatment that leads to taxation at both the company and the investor level. An LPCI is a special form of lim - ited partnership whose sole objective is a collec - tive capital investment and which is reserved for qualified investors, similar to limited partnership fund structures in other jurisdictions. At least one member bears unlimited liability (general partner), while other members (limited partners) are liable only up to a specified amount (limited partner’s contribution). General partners must be companies limited by shares, with their reg - istered office in Switzerland. Limited partners must be qualified investors according to CISA. An LPCI may only manage its own investments and conducts investments in risk capital. The investments in companies or projects can take the form of equity capital, lending or mezzanine financing. Those sparse funds subject to CISA with venture capital investments have been set up and authorised as LPCI. As of 1 March 2024, a new fund type, the Limited Qualified Investor Fund (L-QIF), which is exempt from any authorisation, approval and product supervision by FINMA and, therefore, signifi - cantly reduces set-up costs and time to mar -
ket, has been introduced in the CISA/CISO. The L-QIF must be managed by a supervised Swiss fund management company or manager of col - lective assets and set up as one of the above- mentioned forms of Swiss collective investment schemes, except for the SICAF, which is not a permitted legal form for an L-QIF. The L-QIF is open only to qualified investors and provides for very liberal investment rules and risk diversifi - cation requirements to encourage innovation, similar to unregulated fund structures in other jurisdictions, such as the Reserved Alternative Investment Fund (RAIF) in Luxembourg. This flexible new fund structure (eg, in the form of an LPCI) could also be an efficient structuring solution for venture capital funds. 2.2 Fund Economics Fund Principals, as investment managers or advisers to the venture capital fund, may charge a management fee and/or performance fee to the fund in accordance with the applicable pro - visions under CISA/CISO and the fund regula - tions. As an investor in their own venture capi - tal fund, Fund Principals may participate in the economics of the fund only in accordance with the principle of equal treatment of all investors, which applies on the share class rather than the fund level. The rules of conduct of the Asset Management Association Switzerland (AMAS), which are recognised by FINMA as a minimum standard, specify the principle of equal treatment of investors and stipulate that fund manage - ment companies and other “fund institutions” must manage collective investment schemes in accordance with the principle of relative equal treatment, according to which objectively justi - fied differentiations are permitted (eg, rebates to all investors meeting defined objective criteria). However, there are no established or evolving market standards in Switzerland with respect to key terms for Fund Principals.
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