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Collective Investment Schemes

Supervision of collective investment schemes

The Federal Act on Collective Investment Schemes (Collective Investment Schemes Act, CISA) and the Federal Ordinance on Collective Investment Schemes (Collective Investment Schemes Ordinance, CISO) have been in force since 1 January 2007. These two pieces of legislation are supplemented by the FINMA Ordinance on Collective Investment Schemes (CISO-FINMA), which came into force on 15 February 2007. The legislation is further supplemented by FINMA circulars, while self-regulatory rules adopted by industry organisations may be recognised by the FINMA as a minimum standard.

The entry into force of the CISA has restored the eurocompatibility of the applicable legislation in this area. It has also extended the scope of the legislation to cover collective investment schemes in corporate form (investment companies with variable capital [SICAVs], investment companies with fixed capital [SICAFs] and limited partnerships for collective investments) and achieved general liberalisation in this area. Additionally, the protection accorded to investors – a consistent aim of the Act (Art. 1 CISA) – now reflects their differing needs in that it distinguishes between "ordinary" and "qualified" investors. The Act is also designed to improve their rights and further enhance transparency (Memorandum on the Federal Act on Collective Investment Schemes dated 23 September 2001).

Art. 2 para. 2 CISA contains a non-exhaustive list of collective investment schemes which are not governed by the Act. In addition and provided the requisite conditions are met, investment companies in the form of public limited companies (Art. 2 para. 3 CISA) that are listed on a Swiss stock exchange or are aimed solely at qualified investors, in-house funds set up on a contractual basis by a bank or securities dealer (Art. 4 CISA) and structured products (Art. 5 CISA) do not fall under the scope of the Act.

In accordance with Art. 132 CISA, FINMA grants the licences and approvals required under the Act and monitors compliance with legislative, contractual, constitutive and regulatory provisions. The CISA and its associated ordinances set out the conditions for granting a licence. In particular, they govern the investment principles of the various forms of collective investment scheme and stipulate the minimum content of the documents that require approval.

The CISA distinguishes between the concepts of licence and approval. Institutions that are subject to supervision require a licence (CISA Art. 13), while the documents of collective investment schemes that are subject to supervision require approval.

Any person or institution who, on the basis of Art. 8 CISO, manages or acts as custodian for collective investment schemes, requires a licence from FINMA. This includes:

  • fund management companies (Art. 28 ff. CISA);
  • SICAVs (Art. 36 ff. CISA);
  • limited partnerships for collective investments (Art. 98 ff. CISA);
  • SICAFs (Art. 110 ff. CISA);
  • custodian banks (Art. 72 ff. CISA);
  • asset managers of Swiss collective investment schemes (Art. 18 CISA);
  • distributors (Art. 19 CISA);
  • representatives of foreign collective investment schemes (Art. 119 ff. CISA).
Asset managers of foreign collective investment schemes can voluntarily apply for a licence from the supervisory authority (Art. 13 para. 4 CISA).

The licensing requirement for distributors and representatives of foreign collective investment schemes is, as before, triggered by public advertising.

Licences are granted to all the institutions above if both the general and the institution-specific conditions are fulfilled (Art. 14 CISA).

The following documents for collective investment schemes require FINMA approval:

  • the collective investment agreements of investment funds (Art. 25);
  • the articles of association and investment regulations of SICAVs;
  • the partnership agreements of limited partnerships for collective investments;
  • the articles of association and investment regulations of SICAFs;
  • the corresponding documents of foreign collective investment schemes.
Approval is granted as soon as the product complies with the applicable legislative requirements.
Because of their dual nature, SICAVs, SICAFs and limited partnerships for collective investments logically require both a licence as an institution and approval for their product or products.
The dual supervisory system, with auditors acting as an extended arm of FINMA, requires fund management companies (both for themselves and for the funds they manage), SICAVs, SICAFs, limited partnerships for collective investments, asset managers of collective investment schemes and representatives of foreign collective investment schemes to designate an auditor recognised by FINMA (Art. 126 CISA). Distributors are not obliged to comply with this requirement, while custodian banks' status as banks means that they already have a recognised auditor. The auditor examines whether the licence holder is complying with legislative, constitutive and regulatory requirements and sets out its findings in a report that is delivered to both the licence holder and the supervisory authority (Art. 128 CISA).