The draft law aims to strengthen the competitiveness of the Swiss investment fund market, which currently does not have any type of unregulated collective investment scheme. The draft law provides thus for the introduction of a type of fund, a Limited Qualified Investor Fund (L-QIF), which is neither authorised, approved or supervised by the Swiss Financial Market Supervisory Authority (FINMA). The characteristics of the L-QIF are mainly based on the Luxemburg legislation governing Reserved Alternative Investment Funds (RAIF). Therefore, the proposed regulations for the L-QIF largely overlap with regulations for RAIF’s. Both products can take different legal forms (investment funds or incorporated fund), and neither is subject to approval or supervision by the supervisory authority. Both products are reserved for a limited circle of qualified investors. The administration (portfolio and risk management) of a RAIF must be ensured by an AIF manager who holds an authorization in accordance with the directive GFIA and subject to prudential supervision. This regime is similar to the one that is intended for L-QIF. In both cases, the provisions of the money laundering and the supervision provided for therein also apply.
The consultation procedure will last until 17 October 2019. For further details, please refer to the Explanatory Report of the Federal Council:
There is some doubt that this new fund category will really improve the Swiss investment fund market, which is less than a quarter of the size of the Luxemburg market. In particular it does not solve the issue related to the 35% withholding taxes on the distributed or hoarded profits, but it is certainly a positive sign of the willingness of the Federal Council to show initiatives to enhance and promote the Swiss financial market. For further information on the proposals, or how the regulations of RAIF’s currently operate, please speak to your regular contact at Charles Russell Speechlys in either Switzerland or Luxembourg.