The Swiss federal council plans to amend the collective investment schemes act – Kollektivanlagengesetz KAG – to create a new category for funds called Limited Qualified Investor Funds (L-QIFs).
The amendments relate in particular to articles 13 and 15 of the collective investment schemes act.
In a message sent to parliament, the council explained that L-QIFs are exempted from the authorization and approval requirements imposed by the financial market supervision authority FINMA.
This represents a moderate deregulation of the fund market in Switzerland, it said, noting that with the new law investment funds will have the possibility to be marketed faster in the future.
Specific investment rules apply to L-QIFs, the federal council said, highlighting the limited pool of investors and the aim of promoting innovation for products.
One requirement states that the new fund category is open only for qualified investors that rely on professional advice without the need for special protection because of their financial situation.
The changes to the act aim to increase the number of collective investment schemes in Switzerland.
The new fund category offers qualified investors a Swiss alternative to similar foreign products. Especially in the area of alternative and innovative fund products, the legal framework abroad appears to be often more attractive than in Switzerland.
EU member states have introduced in recent years fund types that do not require approval by the supervisory authority, for example the Reserved Alternative Investment Fund (RAIF) in Luxembourg or the Notified Alternative Investment Fund (NAIF) in Malta.
The federal council’s proposal is based on a motion by Noser Ruedi, member of the liberal group in the Council of States, the parliament’s upper house.
Ruedi explained in the motion, already approved by the upper and lower houses of parliament, that Swiss investment funds are hardly attractive even for qualified investors, especially pension funds and insurance companies.
Last summer the Swiss government opened a consultation on the introduction of this new funds category; Parliament is set to discuss the amendments in a winter session this year. The new rule is likely to enter into force in 2022.
SFAMA, the Swiss funds and asset management association, supports the federal council’s decision and said it expects a swift debate on the matter in parliament to enforce the changes quickly.