Switzerland looks to attract Alternative Investment Funds

26 August 2020

In mid-August, Switzerland’s Federal Council presented draft changes, which will amend the country’s Collective Investment Schemes Act.

In essence, Switzerland is looking to create a new fund category that will present qualified investors with a Swiss alternative fund structure which is similar to preferred foreign fund structures. Through the launch of the new scheme, Switzerland is aiming to increase its attractiveness as a jurisdiction for alternative and private funds. The funds which fall under the proposed legislation will be known as Limited Qualified Investor Funds (‘L-QIFs’).

In its present format, the draft act proposes to allow certain Swiss collective investment schemes to be incorporated and operate without first seeking authorization or consent from the Swiss Financial Market Supervisory Authority (‘FINMA’). Only (Swiss or Foreign) qualified investors will be able to opt for the scheme and the funds itself is required to be managed by investment managers which are supervised by FINMA or equivalent foreign financial Regulators. L-QIFs will need to be audited by Swiss licensed Audit Firms

It is expected that the bill will be presented to Switzerland’s parliament for discussion later this year and will not come into force before 2022.

‘We believe that the proposed L-QIF framework is inspired by Luxembourg’s Reserved Alternative Investment Fund (‘RAIF’), which is a particularly popular European fund structure. L-QIFs will offer a number of advantages, including a cost-effective and speedy market launch for funds. We expect qualified investors to follow the developments of the legislation closely,’ says Ivo Hemelraad , CEO ZEDRA, based in Switzerland.

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