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Collective investment schemes legislation

Introduction

The legal basis for the fund business in Switzerland is the Swiss Federal Act on Collective Investment Schemes (Collective Investment Schemes Act, CISA) of 23 June 2006, which came into force on 1 January 2007, thus replacing the Federal Act on Investment Funds (Investment Fund Act, IFA) of 18 March 1994. Swiss legislation has thus been brought in line with the new EU funds directive UCITS (Undertakings for Collective Investments in Tranferable Securities), thereby strengthening Switzerland's competitiveness as a location for collective investment instruments. The revised versions of the Collective Investment Schemes Act (CISA), the Collective Investment Schemes Ordinance (CISO) and FINMA?s Collective Investment Schemes Bankruptcy Ordinance (CISBO-FINMA) entered into force on 1 March 2013. The revised provisions in the law governing qualified investors and the Key Investor Information Document (KIID) replacing the simplified prospectus (Art. 10, 76 and 77 CISA) are also part of this recent revision and entered into force subsequently after a set delay on 1 June 2013. The same applies to the provisions on the duty to keep documentary records when distributing collective investment schemes set out in both the law and the ordinance (Art. 24 para. 3 CISA and Art. 34a CISO), which entered into force on 1 January 2014 and have been added to the Code of Conduct.        

 The aims of the CISA are to protect investors and to ensure the tranparency and functionality of the market. It regulates open-end and closed-end collective investment schemes. The CISA is designed as a framework law and focuses solely on providing basic regulations. The Ordinance of the Swiss Federal Council on Collective Investment Schemes (Collective Investment Scheme Ordinance, CISO) as well as the Ordinance of the Swiss Financial Market Supervisory Authority on Collective Investment Schemes (Collective Investment Scheme Ordinance-FINMA, CISO-FINMA) provide more detailed reulations. The latter also includes detailed investment regulations (e.g. on the use of derivatives, provisions on mandatory publications, auditing, and securities repurchase agreements).

Supervisory authority

The supervisory authority for investment funds in Switzerland is the Swiss Financial Market Supervisory Authority (FINMA). It is responsible for the authorization and supervision of the institutions and investment funds subject to its control.

Characteristics of fund legislation in Switzerland

Under Swiss investment fund law, an investment fund is defined as being a pool of assets raised from investors as a result of public advertising for the purpose of collective investment, and managed by the fund management company for the account of the investors in accordance whith the principle of risk diversification. Hence only funds established on a contractual basis or as an investment company with variable capital (SICAV) are permitted as open-end collective investments schemes in Switzerland. Closed-end collective investment schemes take the form of a limited partnership for collective investment or an investment company with fixed capital (SICAF).

As regards domestic investment funds, Swiss fund legislation draws a distinction between

  • securities funds (harmonized with the European fund directive)
  • real estate funds
  • other funds for traditional and alternative investments.