Collective Investment Schemes Regulations in Switzerland

Transcription

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2 Collective Investment Schemes Regulations in Switzerland

3 This publication contains unofficial translations of the official original German texts. KPMG and the SFA cannot be held liable for any misinterpretation which could result from the use of these translations. Bibliografische Information Der Deutschen Bibliothek Die Deutsche Bibliothek verzeichnet diese Publikation in der Deutschen National bibliografie; detaillierte biblio grafische Daten sind im Internet über abrufbar. Alle Rechte, auch die des Nachdrucks von Auszügen, bleiben vorbehalten. Jede Verwertung ist ohne Zustimmung des Verlages unzulässig. Dies gilt insbesondere für Vervielfältigungen, Übersetzungen, Mikroverfilmungen und die Einspeicherung und Verarbeitung in elektronische Systeme. Schulthess Juristische Medien AG, Zürich Basel Genf 008 ISBN

4 Foreword The Federal Act on Collective Investment Schemes (CISA), which replaced the Federal Act on Investment Funds of March 8, 994, entered into force on January, 007. The purpose of this publication is to provide an aide for those in practice. The numerous charts provide a quick overview of the complex nature of the legal framework encompassing Swiss collective investment schemes. The charts are explained briefly to enable quick comprehension. Furthermore, this publication contains a table which provides an overview of the approval, notification and publication obligations which should be a practical tool to help the individual licensees determine the requirements on them for approval, notification and publication. Clearly this tabular format can only provide an overview and cannot replace the need for reference to the basic regulatory texts. The regulatory basis for the individual requirements is described and should enable the corresponding regulations to be quickly found. The texts on the Federal Act on Collective Investment Schemes (CISA), the Collective Investment Schemes Ordinance (CISO) as well as the Ordinance of the Swiss Federal Banking Commission (SFBC) on Collective Investment Schemes (CISO-SFBC) are a major part of this publication. These provisions of the Act and Ordinances occur by topic. In other words, the relevant detailed provisions of the Ordinances directly follow the underlying provisions of CISA. This should eliminate tedious page turning between the individual texts of the Act and Ordinances. The circulars of the SFBC on the collective investment schemes law follow the texts of CISA, CISO and CISO-SFBC. A key word list for CISA, CISO and CISO-SFBC, an index of CISA, CISO and CISO-SFBC provisions as well as references to SFBC guidelines and sample documents from the Swiss Funds Association (SFA) complete the publication. We would like to express our thanks to the Swiss Funds Association for providing us with the unofficial translation of CISA, CISO and CISO-SFBC and the permission to include these translations in our publication. Particular thanks are due to several colleagues: Ralph Gramigna for designing the charts, Helga Schlumpf for preparing the factual input for the tabular overview of the approval, notification and publication obligations. A special thanks is owed to Michael Ganz for his support in editing the documents and preparing the directory, as well as to Heinz Weidmann, Eric Young and Ben Jowett for the En glish translation of the documents. We would also like to thank our colleagues from KPMG for reviewing the manuscript: Christoph Lehmann, Fabio Pelli, Reto Schumacher and Mirjam Eggen. In addition we thank Iren Sticha, Andrea Wallimann and Miriam Habegger for the editing. Zurich, June 008 Markus Schunk Dr. Armin Kühne Astrid Keller V

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6 Table of contents Foreword... Abbreviations... Index of charts... References to SFBC guidelines and SFA sample documents with link to the website Literature.... V IX XI XIII XV Part : Charts.... CISA scope of application Forms and types Authorization and approval Authorization procedure Exemptions from the authorization requirement Ordinary approval procedure Simplified approval procedure for open-ended collective investment schemes Delegation of tasks Delegation of tasks of the fund management company or SICAV Tasks and their delegation by the fund management company Tasks and their delegation by the self-managed SICAV Tasks and their delegation by the externally managed SICAV Duties of the custodian bank Investors Types of investors Qualified investors Swiss collective investment schemes Basic documents Swiss contractual fund Basic structure Amendments to the fund contract Procedure for the merger of contractual funds and subfunds of contractual funds Swiss SICAV: Basic structure Swiss limited partnership for collective investment: Basic structure Swiss SICAF: Possible structure Foreign collective investment schemes Basic structure Approval obligation and approval qualifications VII

7 Table of contents 9. Structured products Public offers Contents of the simplified prospectus Part : Approval, notification and publication obligations pursuant to collective investment schemes law Part : Act and Ordinances Part 4: Swiss Federal Banking Commission Circulars Key word list for CISA, CISO and CISO-SFBC Index of CISA, CISO and CISO-SFBC provisions... VIII

8 Abbreviations Art. AS ASA BBl CAO Article Amtliche Sammlung (Official Collection of Federal Legislation) Federal Act of December 6, 005 on the Admission and Supervision of Auditors (Audit Supervision Act; SR.0) Bundesblatt (Federal Gazette) Ordinance of September 9, 006 on Qualifying Capital and Risk Diversification for Banks and Securities Dealers (Capital Adequacy Ordinance; SR 95.0) CC Swiss Civil Code of December 0, 907 (SR 0) CDS cf. CHF CISA CISO credit default swaps confer, see Swiss francs Federal Act of June, 006 on Collective Investment Schemes (Collective Investment Schemes Act; SR 95.) Ordinance of November, 006 on Collective Investment Schemes ( Collective Investment Schemes Ordinance; SR 95.) CISO-SFBC Ordinance of the Swiss Federal Banking Commission of December, 006 on Collective Investment Schemes (SR 95.) CO div. EC e.g. etc. ETF et seq. FMSA ICS i.e. IT Federal Act of March 0, 9 regarding the Supplementation of the Swiss Civil Code (Part Five: Code of Obligations; SR 0) diverse European Community exempli gratia (for example) et cetera Exchange Traded Funds et sequens (and the following) Federal Act on Federal Financial Markets Supervision (Financial Market Supervision Act; BBl ) internal control system id est (that means) Information Technology IX

9 Abbreviations KAR lit. m MLA MLO-SFBC mn. NAV NBA NBO OECD OTC key audit risk litera (letter) million p. page Para. PTR REIT revco SFA SFBC SICAF SICAV SNB SPV SR TER UCITS VaR Federal Act of October 0, 997 on the Prevention of Money Laundering in the Financial Sector (Money Laundering Act; SR 955.0) Ordinance of the SFBC of December 8, 00 concerning the Prevention of Money Laundering (SFBC Money Laundering Ordinance; SR 955.0) margin note net asset value Federal Act of October, 00 on the Swiss National Bank (National Bank Act; SR 95.) Ordinance of March 8, 004 to the Federal Act on the Swiss National Bank (National Bank Ordinance; SR 95.) Organization for Economic Co-operation and Development over-the-counter Paragraph portfolio turnover rate real estate investment trust revised Code of Obligations Swiss Funds Association (until 998: Swiss Investment Funds Association) Swiss Federal Banking Commission Société d investissement à capital fixe (Investment company with fixed capital) Société d investissement à capital variable (Investment company with variable capital) Swiss National Bank special purpose vehicle Systematische Rechtssammlung (Classified Compilation of Federal Legislation) total expense ratio undertakings for collective investments in transferable securities value-at-risk X

10 Index of charts. CISA scope of application Forms and types Authorization procedure Exemptions from the authorization requirement Ordinary approval procedure Simplified approval procedure for open-ended collective investment schemes Delegation of tasks of the fund management company or SICAV Tasks and their delegation by the fund management company Tasks and their delegation by the self-managed SICAV Tasks and their delegation by the externally managed SICAV Duties of the custodian bank.... Types of investors..... Qualified investors Swiss collective investment schemes: Basic documents Swiss contractual fund: Basic structure Swiss contractual fund: Amendments to the fund contract Swiss contractual fund: Procedure for the merger of contractual funds and subfunds of contractual funds (corresponding procedure for the transfer of assets and liabilities of a SICAV), Part I Swiss contractual fund: Procedure for the merger of contractual funds and subfunds of contractual funds (corresponding procedure for the transfer of assets and liabilities of a SICAV), Part II Swiss SICAV: Basic structure Swiss limited partnership for collective investment: Basic structure Swiss SICAF: Possible structure Foreign collective investment schemes: Basic structure Foreign collective investment schemes: Approval obligation and approval qualifications Structured products: Public offers Structured products: Contents of the simplified prospectus XI

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12 References to SFBC guidelines and SFA sample documents with link to the website A. SFBC guidelines The supervisory authority has published guidelines for the submission of authorization and approval applications which have proven to be a helpful aide in practice. In particular, the supervisory authority has published the following guidelines: Guideline for applications regarding obtaining authorization as an asset manager in accordance with the Collective Investment Schemes Act, edition of June, 007 Guideline for applications regarding obtaining authorization as a fund management company, amendments within the fund management company, changing the fund management company, edition of September 7, 007 Guideline for applications regarding obtaining authorization as a custodian bank, amendments within the custodian bank, changing the custodian bank, edition of September 7, 007 Guideline for applications regarding obtaining approval of the fund contract of a collective investment scheme, the approval of additional subfunds, the approval of amendments to the fund contract, edition of September 7, 007 Guideline for applications regarding obtaining authorization as a SICAV and the approval of its articles of association and its investment regulations, the approval of additional subfunds, the amendments within the SICAV, edition of September 7, 007 Guideline for applications regarding obtaining authorization as a SICAF and the approval of its articles of association, the investment regulations, the amendments within the SICAF, edition of September 7, 007 Guideline for applications regarding obtaining authorization as a limited partnership for collective investment and the approval of its company agreement, the amendments within the limited partnership for collective investment, edition of September 7, 007 Guideline for applications regarding obtaining authorization as a representative of foreign collective investment schemes, edition of June, 007 Guideline regarding the responsibilities of a representative, edition of June, 007 Guideline for applications regarding approval for public distribution of foreign collective investment schemes in or from Switzerland which conform with both Guidelines 00/07/EC and 00/08/EC which supersede Guideline 85/6/EC (Guideline UCITS III), edition of June, 007 XIII

13 References to SFBC guidelines and SFA sample documents with link to the website Guideline for applications regarding approval of foreign collective investment schemes for public distribution in or from Switzerland which are not EC compatible, edition of June, 007 Guideline for applications regarding obtaining authorization as distributor, edition of June, 007 Guideline for applications regarding audit firms which obtain authorization for simplified recognition of auditors for the audit of asset managers of collective investment schemes, representatives of foreign collective investment schemes, edition of October, 007 Guideline for applications regarding the approval of valuation experts of real estate funds, edition of November 5, 00 The SFBC publications are available at < B. Self-regulation provisions of the Swiss Funds Association (SFA) The Swiss Funds Association (SFA) has published a code of conduct as well as numerous guidelines and sample documents that serve the purpose of self-regulation. The SFA publications are available at < XIV

14 Literature For an in-depth study of the Swiss legislation related to collective investment schemes reference is made to the following publication available in German: Hasenböhler Franz / Kühne Armin / Lengauer Daniel / Amstutz Therese / Imwinkelried Michaela / Dö m e r Philipp, Recht der kollektiven Kapitalanlagen, Unter Berücksichtigung steuerrechtlicher Aspekte, Zürich, Basel, Genf 007 XV

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16 Part Charts

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18 Introduction The following charts serve the purpose of presenting complicated procedures and processes in the Swiss collective investment schemes law in a systematic and simplified manner. They should aide the practitioner in finding his way through the individual areas of the legal framework. We have consciously limited ourselves to a few important topics which were suited to presentation in graphic form. The charts, therefore, do not provide a complete picture, but are a tool which aids in the understanding of the complex legal framework of the Swiss collective investment schemes law.

19 Part : Charts. CISA scope of application CISA Scope of Application Table - Collective investment schemes Subject to CISA Swiss collective investment schemes governed by CISA Open-ended collective investment schemes Closed-ended collective investment schemes Contractual fund Investment company with variable capital (SICAV) Limited partnership for collective investment Investment company with fixed capital (SICAF) Foreign collective investment schemes subject to CISA Open-ended collective investment schemes Closed-ended collective investment schemes Contractual fund Company law collective investment scheme Company law collective investment scheme Not subject to CISA, but regulated Structured products In-house funds Not subject to CISA Swiss entities not governed by CISA Specifically not Institutions and ancillary institutions in the occupational pension sector including investment foundations Social security institutions and compensation funds Public authorities and institutions Operating companies which are engaged in business activities Holding companies Investment clubs whose members are in a position to manage their financial interests themselves Associations and foundations as defined in the Civil Code Investment company in the form of a corporation provided that it is listed on a Swiss stock exchange or only qualified investors can participate and shares are registered (confirmed annually by the auditors) Foreign collective investment schemes not subject to CISA Registered office and main administrative office (of the fund management company or the company law collective investment scheme) or the company in a foreign country and no public advertising in or from Switzerland (no duty to obtain approval) Chart : CISA scope of application 4

20 . CISA scope of application The law provides four different investment vehicles that are made available for the structuring of a Swiss collective investment scheme. The contractual fund and the investment company with variable capital (SICAV) belong to the open-ended collective investment schemes. The open-ended character of these collective investment schemes results from the investor being able to request redemption of his units and their repayment in cash at any time. The SICAV is the company law equivalent of the open-ended collective investment schemes. With the closed-ended collective investment schemes, Swiss law provides the limited partnership for collective investment following the example of the Anglo-Saxon limited partnership and also the investment company with fixed capital (SICAF). Investment companies with fixed capital are not governed by CISA if their units are listed on a Swiss stock exchange or if only qualified investors can participate in them. If neither of these two requirements are met, then the SICAF falls within the scope of CISA. Foreign collective investment schemes which are the subject of public advertising in or from Switzerland, irrespective of their legal status, are governed by relevant provisions of CISA (Art. Para. 4 CISA). The definition of foreign collective investment schemes encompasses both open-ended as well as closed-ended collective investment schemes (Art. 9 CISA). Both the contractual forms as well as companies with an open-ended structure are deemed to be foreign open-ended collective investment schemes. The contractual forms also include, in addition to assets that were accumulated on the basis of a fund contract and which are managed by a fund management company with its registered office and main administrative office abroad, other agreements with similar effect for the purpose of collective capital investment (Art. 9 Para. lit. a CISA). Furthermore, in addition to companies, schemes with structures similar to companies and with registered office and main administrative office abroad are also included where their object is collective capital investment and their investors have a legal right with regard to the company itself, or with regard to a closely related company, to the redemption of their units at the net asset value (Art. 9 Para. lit. b CISA). A company with a closed-ended structure is deemed to be a foreign closed-ended collective investment scheme. These include companies and schemes with their registered office and main administrative office abroad whose object is collective capital investment and whose investors have no legal right with regard to the company itself, or with regard to a closely related company, to the redemption of their units at the net asset value (Art. 9 Para. CISA). For example, foreign SICAFs and foreign limited partnerships are deemed to be such companies. Principally, structured products are not governed by CISA and therefore are not subject to supervision (Art. 5 Para. 5 CISA). According to Art. 4 CISA, in-house funds are not governed by CISA as long as certain requirements are met (written discretionary management agreement, no issuing of unit certificates and no public advertising). References in this publication to one gender include both genders. 5

21 Part : Charts Art. Para. CISA contains a list of investment vehicles which are not governed by CISA. Exempt from the scope are institutions and ancillary institutions in the occupational pensions sector (including investment foundations), social security institutions and compensation funds, public authorities and institutions, operating companies which are engaged in business activities, holding companies, the associations and foundations as well as investment clubs.. Forms and types Forms and Types Table - Swiss collective investment schemes under CISA Forms Open-ended collective investment schemes Closed-ended collective investment schemes Contractual fund Investment company with variable capital (SICAV) Limited partnership for collective investment Investment company with fixed capital (SICAF) Types Securities funds Real estate funds Other funds for traditional investments Other funds for alternative investments Investments Securities Real estate Traditional investments Alternative investments Investments in risk capital Construction and real estate projects Alternative investments In principle free Chart : Forms and types 6

22 . Forms and types The open-ended collective investment schemes are organized into different types based on the investment provisions. This classification is independent of the legal structuring (contractual fund or SICAV), independent of the group of investors in the collective investment (public investor or qualified investor) and independent of whether it is an Exchange Traded Fund (ETF). The investment provisions regulate the permitted investments, the investment restrictions, the investment techniques, risk diversification as well as other specific areas. CISA provides four types of open-ended collective investment schemes: securities funds (Art. 5 et seq. CISA, Art. 70 et seq. CISO), real estate funds (Art. 58 et seq. CISA, Art. 86 et seq. CISO), other funds for traditional investments (Art. 68 et seq. CISA, Art. 99 et seq. CISO) and other funds for alternative investments (Art. 68 et seq. CISA, Art. 99 et seq. CISO). Principally, the limited partnership for collective investment invests in risk capital (Art. 0 Para. CISA). Based on a related authorization in Art. 0 Para. CISA, the Federal Council has additionally permitted other investments for limited partnerships for collective investment. Examples are investments in construction and real estate projects as well as alternative investments (Art. Para. CISO). These other investments do not need to have the character of risk capital pursuant to Art. 0 CISO. Therefore it is possible to create a hedge fund in Switzerland in the form of a limited partnership for collective investment, which is also common internationally for limited partnerships. The investment company with fixed capital (SICAF) is principally free as regards its investment policy. According to Art. 5 Para. CISA, Art. 69 CISA and correspondingly Art. 64, Art. 70 and Art. 7 CISA apply to investments. The reference to the requirements for other funds (Art. 69 CISA) means that many diverse investment possibilities are open to the SICAF. Should there be a need for additional investment possibilities, the supervisory authority can permit additional investments based on Art. Para. CISO. 7

23 Part : Charts. Authorization and approval. Authorization procedure Authorization procedure Table - Licensee Fund management company of the contractual fund Investment company with variable capital (SICAV) Limited partnership for collective investment Investment company with fixed capital (SICAF) Asset managers of collective investment schemes Representatives of foreign collective investment schemes Distributor Authorization documentation Articles of association Organizational regulations Articles of association Organizational regulations Company agreement Articles of association Organizational regulations Relevant organizational documentation Relevant organizational documentation Relevant organizational documentation Authorization procedure Licensee Authorization conditions SFBC Start of business or change of circumstances Submission of application for approval Application Authorization documentation Evidence that the authorization conditions are fulfilled SFBC receives application SFBC SFBC confirms receipt of application Review of authorization conditions Management and business operations Good reputation Guarantee of proper management Requisite professional qualifications Significant equity holders Good reputation No exertion of their influence to the detriment of prudent and sound business practice Internal regulations and appropriate organizational structure Ensure compliance with legal duties Custodian bank Relevant organizational documentation Sufficient financial guarantees Additional authorization conditions pursuant to CISA SFBC SFBC order Compliance with the code of conduct of a specific industry body (to the extent the SFBC makes this a condition for its granting of authorization) Chart : Authorization procedure 8

24 . Authorization and approval Any party responsible for the management of a collective investment scheme or the safekeeping of the assets held in it is a licensee and needs authorization from the supervisory authority (Art. Para. CISA). Any party applying for authorization must submit the authorization documentation mentioned in Art. 7 CISO to the supervisory authority, showing the organization of the licensee. These documents must also be submitted to the supervisory authority if the underlying circumstances leading to authorization have changed (Art. 6 CISA, Art. 4 CISO). The supervisory authority will only grant authorization to those licensees who meet the general authorization conditions of Art. 4 CISA. The supervisory authority defines which requirements for evidence of authorization conditions must be met to obtain authorization (Art. 0 to Art. CISO). Authorization conditions stipulate that the persons responsible for management and the business operations have a good reputation, guarantee proper management and possess the requisite professional qualifications (Art. 4 Para. lit. a CISA). The fulfillment of requirements for the professional qualifications is assessed taking into consideration the particular activities intended and based on education and training, experience and career history (Art. 0 Para. CISO). Furthermore, persons who own at least 0 percent of the capital or votes in the licensee or whose business activities can have material influence in another way (significant equity holders) must have a good reputation and do not exert their influence to the detriment of prudent and sound business practice (Art. 4 Para. lit. b as well as Art. 4 Para. CISA, Art. CISO). Additionally, it must be ensured through internal regulations and appropriate organizational structure that the licensee can fulfill its legal duties (Art. 4 Para. lit. c CISA). This includes an executive board consisting of at least two persons, joint signatory power of the authorized signatories, organizational regulations, a proper set of regulations in particular in areas of risk management, internal control system (ICS) and compliance, the employment of sufficiently qualified personnel and an internal audit if required by the supervisory authority (Art. CISO). In addition, the authorization is only issued if sufficient financial guarantees exist (Art. 4 Para. lit. d CISA). This shall be deemed to be the case if the licensee meets the relevant provisions regarding the minimum capital or minimum investment amount (Art. CISO). Finally, the supervisory authority may make its granting of authorization dependent on compliance with the code of conduct of a specific industry body (Art. 4 Para. CISA). 9

25 Part : Charts. Exemptions from the authorization requirement System of exemptions from the authorization requirement Authorization for fund management company bank securities dealer insurance institutions Authorization for asset managers Exempts and encompasses Exempts and encompasses Authorization for representatives Exempts and encompasses Authorization for distributors Chart 4: Exemptions from the authorization requirement Institutions which are already subject to governmental supervision, need not apply for a further authorization for activities which are subject to lower authorization conditions (e majore minus). The exemption only applies to the authorization requirement. The legal requirements pertaining to the specific business activities must still be adhered to (e.g. the code of conduct, distribution provisions, responsibilities of a representative). Consequently, fund management companies pursuant to CISA, banks pursuant to the Federal Act on Banks and Savings Institutions, securities dealers pursuant to the Stock Exchange Act and insurance institutions pursuant to the Federal Act on the Supervision of Insurance Companies are exempted from the obligation to obtain authorization as asset manager of collective investment schemes, representative of foreign collective investment schemes and distributor (Art. 8 Para. CISO). Authorized asset managers of collective investment schemes are exempted from the obligation to obtain authorization as representative and distributor (Art. 8 Para. CISO), since an asset manager of collective investment schemes must meet higher requirements when obtaining authorization. The Swiss Post Office and representatives of foreign collective investment schemes are exempt from the obligation to obtain authorization for distributors (Art. 8 Para. CISO). There are no exemptions from the obligation to obtain authorization for the SICAV, the limited partnership for collective investment and for the SICAF, since their objects are limited to the management and distribution of their own collective capital investment. 0

26 4. Authorization and approval. Ordinary approval procedure Ordinary Approval Procedure Table - Products Contractual fund Documentation for approval Fund contract Introduction of product or change in circumstances Approval procedure For subfunds, obligation to obtain approval exists for each subfund Open-ended collective investment scheme Investment company with variable capital (SICAV) Limtied partnership for collective investment Articles of association Investment regulations Company agreement yes yes Is a simplified approval procedure possible? no Investment Company with fixed capital (SICAF) Articles of association Investment regulations Chart 6 no Foreign collective investment scheme Relevant documents Applicant Submission of the application Application Approval documentation Evidence that the approval conditions are fulfilled SFBC receives the application SFBC SFBC confirms receipt of the application SFBC SFBC order Approval conditions SFBC Examines whether the approval conditions are fulfilled Chart 5: Ordinary approval procedure

27 Part : Charts As products, collective investment schemes are subject to obligation to obtain approval from the supervisory authority. The following documents must be approved by the supervisory authority (Art. 5 Para. CISA): Fund contract for a contractual fund (Art. 5 et seq. CISA), articles of association and the investment regulations for a SICAV (Art. 6 et seq. CISA), the company agreement for a limited partnership for collective investment (Art. 98 et seq. CISA), articles of association and investment regulations for the SICAF (Art. 0 et seq. CISA). In the case of foreign collective investment schemes, they must submit the corresponding documents. The supervisory authority reviews the approval conditions and issues the approval by order if the requirements are fulfilled. In the case of contractual funds and SICAVs with subfunds (Art. 9 et seq. CISA), the obligation to obtain approval exists for each individual subfund (Art. 5 Para. CISA). If there is a change in the circumstances underlying the approval, the supervisory authority s approval must be sought prior to the continuation of activity (Art. 6 CISA, Art. 4 et seq. CISO). For Swiss open-ended collective investment schemes (contractual funds and SICAVs), there exists under certain conditions the possibility of a simplified approval procedure (Art. 7 CISA in conjunction with Art. 6 CISO, cf. chart 6 ). See p..

28 . Authorization and approval 5.4 Simplified approval procedure for open-ended collective investment schemes Simplified Approval Procedure for Open-Ended Collective Investment Schemes Tafel - Conditions for the simplified approval procedure Open ended collective investment scheme Fund regulations correspond to or Template which has been recognized by the SFBC as a minimum standard Standard which the SFBC has declared binding for the particular licensee Procedure and time limits for the simplified approval procedure for open-ended collective investment schemes Submission of the application to the SFBC SFBC receives the application Approval period begins one day after receipt If the SFBC requests more information, the approval period is extended until the information is received SFBC SFBC confirms receipt of application Qualified investors Are immediately considered approved (legal fiction) Are considered approved 4 weeks later (legal fiction) Up to months after the simplified approval Securities funds Real estate funds Other funds for traditional investments Other funds for alternative investments The SFBC can request subsequent amendments to the documents Public investors Approval within 4 weeks Approval within 6 weeks Approval within 8 weeks Within the time limits mentioned above Securities funds Real estate funds Other funds for traditional investments Other funds for alternative investments SFBC order Chart 6: Simplified approval procedure for open-ended collective investment schemes

29 Part : Charts For open-ended collective investment schemes (contractual funds and SICAVs) a simplified approval procedure (Art. 7 CISA, Art. 6 et seq. CISO) is possible under certain conditions. An important condition for the simplified approval procedure is that the fund contract (in the case of contractual funds) and the investment regulations (in the case of SICAVs) comply with a format that is recognized by the supervisory authority. At the same time, the format can be derived from a format of an industry body (e.g. the SFA) recognized as a minimum standard or from recognized standards which are binding in relation to the relevant licensee. According to Art. 7 CISO, relatively short time periods apply to the simplified approval procedure for all forms of open-ended collective investment schemes, after which a Swiss collective investment scheme is deemed as approved (legal fiction) or after which the application has to be completed. The simplified approval procedure for collective investment schemes that are limited to qualified investors for securities funds, real estate funds and other funds for traditional investments are deemed to have been approved following receipt of the application (Art. 7 Para. CISO). Other funds for alternative investments are deemed to have been approved four weeks following receipt of the application. As a counterbalance to these short approval periods, the supervisory authority may demand that a subsequent amendment shall be made to the documents for a period of up to three months following the simplified approval (Art. 8 CISO). Subsequent amendments must be published in the media of publication. Since other funds for traditional investments for qualified investors and real estate funds are deemed to have been approved following receipt of the application, the simplified approval procedure for these funds is just a simple notification procedure. Collective investment schemes directed towards public investors shall be approved by the supervisory authority within four to eight weeks following receipt of the application, depending on the type of the collective investment scheme (Art. 7 Para. CISO). Contrary to the collective investment schemes for qualified investors, the simplified procedure for collective investment schemes for public investors thereby ends with an order by the supervisory authority. This is justifiable because it is in accordance with international standards. The supervisory authority can request additional information during the approval period (Art. 6 Para. CISO). Consequently the approval period is postponed until the requested information is received (Art. 7 Para. 4 CISO). For Swiss closed-ended collective investment schemes (limited partnership for collective investment and SICAF), the Federal Council has not made use of its ability (Art. 7 CISA) to allow for a simplified approval process in the CISO. 4

30 4. Delegation of tasks 4. Delegation of tasks 4. Delegation of tasks of the fund management company or SICAV Delegation of Tasks by the Fund Management Company or SICAV Tafel - Delegation of tasks (administration, investment decisions, other specific tasks) Delegation of tasks is in the interest of an efficient management Delegation agreements must be made in writing Agents and the most significant parts of the delegation agreement are to be mentioned in the prospectus A one-time further delegation is possible Fund management company Administration SICAV Investment decisions Asset manager subject to recognized supervision Investment decisions Additional specific tasks Additional specific tasks Third parties Chart 7: Delegation of tasks of the fund management company or SICAV The fund management company may delegate the investment decisions as well as specific tasks provided this is in the interest of efficient management (Art. CISA). However, it shall commission only those persons who are properly qualified to execute the concerned tasks. Furthermore, it must meet the necessary measures for the instruction, monitoring and control of the implementation of the tasks. 5

31 Part : Charts Investment decisions for Swiss collective investment schemes may only be delegated to asset managers who are subject to a recognized supervision (Art. Para. CISA). The delegated tasks must be recorded in written delegation agreements which adequately describe responsibilities, competencies and liability issues. The fund management company must ensure that the delegation agreement provides it with the necessary rights to inspect, instruct and control. The agents and significant parts of the delegation agreements must be mentioned in the prospectus. A one-time further delegation of the delegated tasks by the agents is permissible with the consent of the fund management company. The board of directors of an externally managed SICAV must delegate the administration to an authorized fund management company (Art. 5 Para. 5 CISA, Art. 5 Para. CISO). Furthermore, the provisions for the fund management company in accordance with Art. Para. 4 CISA apply accordingly for the delegation of tasks of the SICAV (Art. 66 CISO). 6

32 4. Delegation of tasks 7 4. Tasks and their delegation by the fund management Tasks and company their Delegation 4 by the Fund Management Company Tafel - Tasks which can be delegated by the fund management company to third parties Calculating the net asset value Determining the issue and redemption prices (Art. 4 lit. b Point 4 CISO) Fund accounting (Art. 4 lit. b Point 7 CISO) Running of IT systems Additional administrative and logistic tasks of the fund management company (tax returns for the funds, source tax refunds etc.) Legal and tax advice Risk management, 4 Compliance Individual management of client assets within the framework of a mandate (Art. 9 sentence lit. a CISA) Investment advisory services Safekeeping and technical administration of the units for collective investment schemes i.e. management of unit accounts (Art. 9 sentence lit. c CISA, Art. 46 Para. lit. c CISO) Distribution of collective investment schemes (Art. 46 Para. lit. d CISO) Rendering of administrative services for collective investment schemes and similar investment vehicles such as inhouse funds, investment foundations and investment companies (Art. 46 Para. lit. e CISO) Tasks which can only be delegated to the executive board of the fund management company Implementation of an internal control system (ICS) within the framework of the board of director s decisions Setting up the accounting for own investment funds and SICAV Valuation of the assets Determining the content of the prospectus, the simplified prospectus, the annual and semi-annual report as well as for additional publications targeted towards investors Decision about the foundation and dissolution of subsidiaries whose sole object is the holding of assets for the collective investment scheme (Art. 68 Para. CISO) Decision about the issue and redemption of units Compliance with notification obligations Conclusion of distribution agreements Appointing of valuation experts Selection, instruction and monitoring of the agents Decision about the creation, dissolution and merger of contractual funds and SICAV within the framework of the principles of investment policies Decision about the creation, dissolution and merger of unit classes Determining the content of the fund contract Determining the profit distributions of the investment funds Representation of foreign collective investment schemes (Art. 46 Para. lit. a CISO) Tasks which cannot be delegated by the board of directors of the fund management company Responsibilities of the board of directors which cannot be transferred in accordance with Art. 76a CO Issuing of organizational regulations (Art. 8 Para. 4 CISA) Ensuring the setting up, implementation and maintenance of an effective internal control system (ICS) Determining business policies and strategies Determining the principles of the investment policy Determining the guidelines for the use of derivatives, securities lending and repurchase agreements (Art. Para., Art. Para. and Art. 7 Para. CISO-SFBC) Decisions about the opening and closing of branches Appointment and removal of special statutory auditors and treatment of their reports (Art. 6 Para. lit. a CISA) Decision about providing ancillary services in accordance with Art. 9 CISA Decision about performing additional tasks in accordance with Art. 46 Para. CISO Decision about taking the responsibility for the administration of SICAVs (Art. 5 Para. 5 CISA) Decision about the foundation of subsidiaries and the participation in companies whose primary object is the collective investment scheme business (Art. 46 Para. lit. b CISO), their dissolution and sale Decision about the purchase and sale of property for the fund management company Chart 8: Tasks and their delegation by the fund management company Delegation only within Switzerland. 4 Delegation only to a group company under the same management. 7

33 Part : Charts The delegable tasks of a fund management company, which can only be delegated to the executive board of the fund management company and the non-delegable tasks of the board of directors of the fund management company are set out in the Circular Delegation of tasks by the fund management company and the SICAV dated August 9, 007 (SFBC- Circular 07/) 5. 5 See p. 9. 8

34 8 4. Delegation of tasks 4. Tasks and Tasks their Delegation and their by delegation the self-managed by the SICAV self-managed SICAV Tafel - 6 Tasks which can be delegated by the SICAV to third parties Calculating the net asset value 6 Determining the issue and redemption prices (Art. 4 lit. b Point 4 CISO) Fund accounting (Art. 4 lit. b Point 7 CISO) 6 Running of IT systems Additional administrative and logical tasks of the fund management company (tax return for the funds, source tax refunds etc.) Legal and tax advice Tasks which can only be delegated to the executive board of the SICAV Implementation of the internal control system (ICS) within the framework of the board of director s decisions Setting up of the accounting Valuation of the assets Determining the content of the prospectus, the simplified prospectus, the annual and semi-annual report and other publications targeted towards investors Decision about the foundation and dissolution of subsidiaries whose sole object is the holding of assets for the collective investment scheme (Art. 68 Para. CISO) Decision about the issue and redemption of shares Compliance with notification obligations Conclusion of distribution agreements Appointing of valuation experts Selection, instruction and monitoring of the agents Risk management Compliance Decision about the creation of new subfunds where provided by the articles of association (Art. 64 Para. lit. d CISO) Decision about the creation, dissolution and merger of unit classes, in as far as the articles of association allow for this (Art. 6 CISO) Creation of investment regulations of new subfunds Amending the investment regulations of existing subfunds, in as far as this is not the responsibility of the general meeting in accordance with Art. 6 Para. CISO Tasks which cannot be delegated by the board of directors of a SICAV Responsibilities of the board of directors which cannot be transferred in accordance with Art. 76a CO Issuing of organizational regulations (Art. 8 Para. 4 CISA) Ensuring the setting up, implementation and maintenance of an effective internal control system (ICS) Determining business policies and strategies Determining the principles of the investment policy Determining the guidelines for the use of derivatives, securities lending and repurchase agreements (Art. Para., Art. Para. and Art. 7 Para. CISO-SFBC) Decisions about the opening and closing of branches Appointment and removal of special statutory auditors and treatment of their reports (Art. 6 Para. lit. a CISA) Appointment and change of the custodian bank (Art. 64 Para. lit. c CISO) Decision about the purchase and sale of non-movable assets which are essential for the direct performance of the SICAV s operations (Art. 68 Para. CISO) Chart 9: Tasks and their delegation by the self-managed SICAV The delegable tasks of a self-managed SICAV, which can only be delegated to the executive board of the self-managed SICAV and the non-delegable tasks of the board of directors of the self-managed SICAV are set out in the Circular Delegation of tasks by the fund management company and the SICAV dated August 9, 007 (SFBC-Circular 07/) 7. 6 Delegation only within Switzerland. 7 See p. 9. 9

35 9 Part : Charts 4.4 Tasks and their delegation by the externally managed Taks and their SICAV Delegation 89 by the externally managed SICAV Tafel - Tasks which a SICAV must delegate to a Swiss fund management company Calculating the net asset value 8 Determining the issue and redemption prices (Art. 4 lit. b Point 4 CISO) 8 Fund accounting (Art. 4 lit. b Point 7 CISO) Running of IT systems Additional adminstrative and logistic tasks of the fund management company (tax return for the funds, source tax refunds etc.) 8, 9 Risk management 8 Compliance Creation of investment regulations of new subfunds Decision about the valuation of assets Decision about the issue and redemption of shares Drawing up the prospectus and the simplified prospectus (Art. 64 Para. lit. e CISO), annual and semi-annual report Accounting Structuring of the internal control system (ICS; Art. 64 Para. CISO) Compliance with notification obligations Supervision of sub-agents, if applicable Further Delegation with Approval of the SICAV Calculating the net asset value 8 Determination of the issue and redemption prices (Art. 4 lit. b Point 4 CISO) 8 Fund accounting (Art. 4 lit. b Point 7 CISO) Running of IT systems Additional adminstrative and logistic tasks of the fund management company (tax return for the funds, source tax refunds etc.) Risk management Compliance Tasks which cannot be delegated by the SICAV s board of directors Responsibilities of the board of directors which cannot be transferred in accordance with Art. 76a CO Issuing of organizational regulations (Art. 8 Para. 4 CISA) Ensuring the setting up, implementation and maintenance of an effective internal control system (ICS) Determining business policies and strategies Determining the principles of the investment policy Determining the guidelines for the use of derivatives, securities lending and repurchase agreements (Art. Para., Art. Para. and Art. 7 Para. CISO-SFBC) Decisions about the opening and closing of branches Appointment and removal of special statutory auditors and treatment of their reports (Art. 6 Para. lit. a CISA) Appointment and change of the custodian bank (Art. 64 Para. lit. c CISO) Decision about the purchase and sale of non-movable assets which are essential for the direct performance of the SICAV s operations (Art. 68 Para. CISO) Decision to delegate the administration of the SICAV to a fund management company (Art. 65 Para. CISO) The rights of the board of directors to control the fund management company (Art. 65 Para. lit. d CISO) Chart 0: Tasks and their delegation by the externally managed SICAV The tasks which must be delegated by an externally managed SICAV to a fund management company, the further delegation of a delegable task of an externally managed SICAV to a 8 Delegation only within Switzerland. 9 Delegation only to a group company under the same management. 0

36 5. Duties of the custodian bank fund management company and non-delegable tasks of the board of directors of an externally managed SICAV are set out in the Circular Delegation of tasks by the fund management company and the SICAV dated August 9, 007 (SFBC-Circular 07/) Duties of the custodian bank Duties of the Custodian Bank Tafel - Custodian bank Third party custodians and collective securities depositories Custodian duties Safekeeping of the fund s assets Payment transfers Monitoring duties Right and obligation to intervene in the fund management company if there are investments which are not permitted Review of compliance with the law and fund regulations regarding calculation of NAV of the units calculation of the issue and redemption prices of each unit investment decisions appropriation of income Other services Issue and redemption of units Chart : Duties of the custodian bank On the one hand, the custodian bank has to fulfill technical responsibilities. This includes safekeeping of the fund s assets, issue and redemption of units as well as payment transfers on behalf of the investment fund (Art. 7 Para. CISA, Art. 04 CISO). On the other hand the custodian bank performs monitoring functions for the collective investment scheme by verifying that the fund management company complies with the law and the fund regulations, in particular with respect to the calculation of the net asset value, the calculation of the issue and redemption prices as well as with regard to the investment decisions and the 0 See p. 9.