New Swiss regulations on marketing of alternatives
By Daniel Häfele, ACOLIN – “I’d like to distribute my hedge fund in Switzerland – is that still possible?” “We are a specialist in offshore funds. Will you take us on as a legal representation client?”
At ACOLIN, we get questions like these almost every day. The answer to both is: yes, it is still possible to distribute hedge funds in Switzerland, but under certain conditions. And yes, we are open for business.
The laws now cover the distribution of all collective investments (CIS) in Switzerland, including AIFs such as hedge funds, as well as UCITS and other retail products.
The revised CISA demands that all CIS offered to qualified investors in Switzerland have to meet the following preconditions:
• Appoint a representative and a paying agent.
• Adding the representative and the paying agent to all Swiss fund documents (including KIIDs).
• Sign a distribution agreement with the representative to which Swiss law is applicable.
• Proof that you are in possession of an authorisation to distribute CIS in your country of origin.
The transition period of 1st March, 2015 only applies if you have been distributing CIS to Switzerland before 1st March, 2013 and for CIS launched before that date. If you plan to distribute newly or take new funds to Swiss investors or distribute grandfathered funds to new distributors, you will have to comply with the above-mentioned prerequisites from the start. In addition, distributors may ask you to comply earlier than the final date, as they may be subject to new regulations, effective this August.
Choosing a legal representative
Once you have decided to distribute in Switzerland, you will need to choose a representative. The following selection criteria should be considered:
• The representative has a licence that extends beyond March 2014. Banks, securities dealers, and insurance companies could offer representation services on the back of a banking or securities dealer licence. Now, they have to file a new application with FINMA to maintain this license.
• The representative is able to take on your fund. Not all representatives are equipped to accept offshore funds.
• The representative provides a distribution network, which gives you access to the distribution channels, as financial intermediaries can only do business with you on a contractual basis.
Working with ACOLIN
At ACOLIN, representation and distribution network management are our core businesses. Our set-up process, tried and tested by more than 50 clients, helps you to get into the markets without delay:
• We advise you on your fund registration and distribution strategy.
• We act as legal representative for your funds for the distribution to qualified and/or non-qualified investors vis-à-vis the authorities, our distribution partners, and investors.
• We help you to set up and carry out your fund business in Switzerland.
The regulatory responsibilities of Swiss representatives are onerous. The start of our process is a detailed operational due diligence review of the funds and the manager, to determine if a minimum set of requirements, similar to the AIFM operational requirements, are in place. At present not all the regulations and constraints are fully defined and as the regulations become clearer, there will be changes in the services offered by the industry. We are working hard to remain at the front of these changes.
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