17th February 2015
Centaur Fund Services informs clients of important changes relating to distribution in Switzerland.
Under the new Collective Investment Scheme Act (“CISA”) the rules for distribution of funds in Switzerland have changed significantly. The new rules take effect from 1 March 2015.
In essence, marketing to many Swiss investors will now require a fund to appoint a Swiss legal representative and paying agent.
The new rules govern the distribution of funds to “Qualified Investors” and divide this term into two categories:
1. Regulated Qualified Investors – essentially regulated Swiss banks, investment managers and insurance companies; and
2. Unregulated Qualified Investors – high net worth individuals who have elected to be treated as unregulated qualified investors, pension funds and corporates with a professional treasury department (such as a family office)
The distribution of funds to Regulated Qualified Investors will continue to be unrestricted. However, for most hedge funds, the key provisions relate to the rules for marketing to Unregulated Qualified Investors.
The process is relatively straightforward and cost effective, but going forward, distribution of funds in Switzerland to Unregulated Qualified Investors will require the appointment of a Swiss representative and paying agent and the updating of the fund’s offering documents to include required disclosures.
The Reverse Solicitation Exemption: It will still be possible to continue to rely on “reverse solicitation” and avoid the requirement to appoint a Swiss representative and paying agent in certain limited exceptions, but this is a risky business as the Swiss interpretation of what constitutes marketing is very broad. For instance, the sending of presentations and fact sheets would be considered marketing.In order for the request of information or the instruction to qualify for the reverse solicitation exception, it must be made without prior solicitation from the fund.For further information on this topic please contact Ronan Daly