The Swiss Collective Investment Schemes Act: New challenges and opportunities for fund managers and investors

Abstract

As a result of regulatory efforts such as the European Alternative Investment Fund Managers Directive, non-EU countries such as Switzerland have revisited their approach to the marketing and distribution of funds. Highlighting these efforts, the new Swiss Collective Investment Schemes Act (CISA) was made effective on 1st March, 2013. This paper outlines some key considerations for investors and fund managers seeking to distribute funds in Switzerland under the new CISA regime. Key topics covered by this paper include: comparison of the old CISA qualified investor safe harbour exemption versus the new CISA qualified investor regime; overview of the qualified investor opt-in opt-out concept; analysis of the broadened definition of distribution under the new CISA regime; potential risks facing non-Swiss-based fund managers and distributors seeking to market to Swiss investors and institutions; the CISA performance distribution loophole; the role of operational due diligence in evaluating CISA fund manager regulatory risks; and the increasing use of operational due diligence consultants by investors to vet underlying manager regulatory risks.