On March 2, 2012 the Federal Council adopted the dispatch on the partial revision of the Federal Act on Collective Investment Schemes (“CISA“) which shall enter into force in 2013 following its parliamentary consultation. In our view, some key propositions of the Federal Council go beyond what is needed to continuously safeguard the compliance of Swiss law with international regulatory standards and the competiveness of the Swiss funds industry.
The revision of the CISA encompasses the following key elements:
- Change of distribution concept: under the existing law, the public distribution of collective investment schemes is subject to regulation. Under the revised CISA, distribution as such, irrespective of it being public or not, will be regulated. Whereas Art. 3 para. 1 draft CISA defines distribution as every offering of and advertisement for collective investment schemes, particularly reverse solicitation as well as an asset manager’s purchase of fund units based on a written asset management agreement shall not be covered by this term.
- Distribution of foreign investment schemes to qualified investors: according to the existing law, the distribution of units of foreign collective investment schemes to qualified investors is generally not subject to regulation. Under the revised CISA, the distribution of foreign funds to qualified investors shall be permissible only if a representative domiciled in Switzerland and supervised by the Swiss Financial Market Supervisory Authority FINMA will be appointed. Considering the specific duties of such representative it is expected that the new rules will substantially impede the distribution of foreign fund units to Swiss qualified investors. The requirement to appoint a representative shall not only apply in case of distribution of foreign funds in Switzerland, but also in cases where foreign funds are distributed out of Switzerland abroad.
- New definition of qualified investors: so far, wealthy individuals (i.e. individuals with financial assets of at least CHF 2 Mio.) are considered qualified investors. The same holds true for all individuals who entered into written asset management agreements with specific asset managers. Under the revised CISA, wealthy individuals shall only be deemed qualified investors upon their specific declaration (“opting-in”). Further, the fact of a written asset management agreement shall no longer turn a private, non-qualified investor into a qualified investor.
- Asset management: Swiss law does not require a manager of foreign collective investment schemes to be supervised by FINMA. With a view to the implementation of the European Alternative Investment Fund Managers Directive into the national laws of the EU member states by mid-2013, Swiss managers of EU alternative investment funds (“AIF“) (or possibly of non-EU AIF marketed in the EU) will need to be licensed by FINMA. Accordingly, the dispatch for a revised CISA provides for authorization requirements of all Swiss asset managers of foreign collective investment schemes. Further, the revised CISA defines the tasks an asset manager may perform and contains rules for the delegation of asset management activities.
As mentioned above, the revised law shall – following parliamentary consultation – enter into force in early 2013. The draft provides for certain transition periods in order to become compliant with the revised act. It should be noted that Swiss managers managing EU AIF (or possibly non-EU AIF marketed in the EU) will need a FINMA authorization by mid-2013. Accordingly, these managers will have to rapidly assess their (future) regulatory status as well as their capability to obtain a license and – as the circumstances require – promptly start the application procedure with FINMA. For further information please see our article headed “Increased Dynamics in the Regulation of Independent Asset Managers”.
In case of questions regarding the revision of the CISA or your regulatory status, please feel free to contact us.