Those planning to set up a PEF in Switzerland should keep in mind that the recently revised CISA contains the following list of potential qualified investors:
- financial mediators;
- an insurance company;
- clients from other countries subject to prudential regulation;
- central banks;
- government organization(s) involved in professional treasury operations;
- pension or other organizations involved in treasury activities;
- major companies;
- PIVs involved in treasury activities for HNWIs;
- HNWIs & PEFs established for HNWIs.
Setting up a PEF in the Confederation of Switzerland & offering it to an unqualified investor(s) requires getting FINMA authorization. Other requirements are as follows:
- managers & custodians must adhere to investor protection regulations;
- investment policy must meet CISA requirements;
- appointment of agents is mandatory;
- FINMA & regulatory organizations from abroad must conclude an agreement on the exchange of data & collaboration;
- offering non-Swiss CISs is permitted if their managers appoint agents & comply with CISA provisions.
The revised edition of CISA contains no requirements with regard to agents offering funds to a qualified investor. An exception is made for HNWIs without membership & PEFs set up for HNWIs.
Establishing an LP in the Confederation of Switzerland requires obtaining FINMA permission. Applications are to be processed by FAOA-recognized auditing firms.
Persons controlling GPS, as well as individuals or legal entities owning no less than a ten percent stake or otherwise capable of wielding significant influence) must adhere to FINMA criteria.
Concluding a partnership agreement in the Confederation of Switzerland requires getting FINMA authorization as well. Normally, permission is granted within 120 days after all the necessary documentation has been submitted.
Getting an investment manager license in the Confederation of Switzerland or obtaining an asset manager license in the Confederation of Switzerland is mandatory. An exception is made for individuals managing assets of non-domestic companies. Their investors must all be qualified, while their assets under management:
- arose from using leverage beneath the threshold of CHF100 mln;
- amount to less than five hundred million francs (without borrowed funds), while CISs (e.g. Swiss LPs) are closed for five years;
- are owned by individuals having business relations or family relations with the managers.
An asset manager that has failed to adhere to the CIS threshold is to be registered as an individual portfolio asset manager.
Those seeking to create a PEF in the Confederation of Switzerland should keep in mind that it’s exempt from an income tax (unless it owns immovable property). Normally, an income tax is imposed on individuals investing in such funds. Swiss residents must pay an income tax on profits earned by LPs operating in this country. They must also pay property tax on partnership shares that they own.
Creating a SICAF in the Confederation of Switzerland, as well as any other investment structures registered in this country, isn’t governed by the CISA. Establishing them only requires paying income & net capital taxes. Issuing shares of a SICAF (or any other companies’ shares) requires paying stamp duty.
Entities accepting deposits from the government but refraining from using them to finance conventional banking operations must now obtain a fintech license in Switzerland. Obtaining a Fintech license in the Confederation of Switzerland imposes fewer & less strict requirements on applicants than getting a Swiss banking license. More flexible provisions on minimum capital also apply.
Seeking to establish a PEF in the Confederation of Switzerland? Need advice on PEF regulation in Switzerland? Why not contact IQ Decision UK?