On behalf of the Federal Council the Federal Department of Finance has initiated the consultation procedure for the revision of the Swiss Collective Investment Schemes Act (“CISA”). The revision aims at bridging regulatory gaps and introducing amendments necessary in view of UCITS IV and of the implementation of the AIFM-Directive (pls. see our articles “UCITS IV ante portas” and “The EU-Directive on Alternative Investment Fund Managers – New Challenges for the Funds Industry” of June 14, 2011).
In summary, the Federal Council requests opinions with regards to the following proposed amendments:
- Mandatory authorization and supervision by the Swiss Financial Market Supervisory Authority FINMA of all Swiss asset managers of foreign collective investment schemes; at present, such asset managers are granted the option to become FINMA-supervised if specific restrictive prerequisites are met.
- Requirement for investment companies with fixed capital – SICAF – to appoint a custodian bank pursuant to the Federal Act on Banks and Savings Institutions which is subject to specific obligations as further set out in the CISA; at present, SICAFs must appoint a custodian and a paying agent which do not need to be supervised.
- Requirement for foreign collective investment schemes distributed in or from Switzerland to nominate a representative; at present, there is no such duty if the investment scheme is exclusively distributed to qualified investors. According to the explanatory report to the revision of the CISA, such representative shall be responsible for safeguarding that the distributed collective investment schemes as well as their asset managers and custodians are in compliance with the provisions of the CISA or with equivalent regulations.
- Authorization requirement for all distributors of Swiss or foreign collective investment schemes.
- Abolishment of the option of individuals with financial investments of less than CHF 2m to become a qualified investor by entering into a discretionary asset management agreement with a prudentially supervised financial institution or an independent asset manager which is a member of a FINMA-approved industry organization.
- Grant of authorization to the Federal Council to introduce additional requirements for the recognition of high-net-worth individuals as qualified investors.
- Various amendments to the CISA in order to align Swiss legislation with UCITS IV.
The consultation regarding the revision of the CISA is open until October 7, 2011. The legislative process shall be terminated by mid-2012. The revision project has a comprehensive scope and would increase the regulatory density for the Swiss funds industry. Some of the proposed amendments are clearly necessary in order to assure continuing international market access for Swiss players. On the other hand, the adequacy and the commensurability of various proposals seem questionable. The draft of the revised CISA addresses thus some highly controversial issues.
On Financial Law Update, we will keep you informed on the consultation and legislation procedure in this matter; please contact us in case of a need for additional information.