New Fund Category L-QIF - Entry Into Force On 1 March 2024

• Published date: 03 April 2024
• Subject Matter: Finance and Banking, Wealth Management, Financial Services, Fund Management/ REITs, Wealth & Asset Management
• Law Firm: Kellerhals Carrard
• Author: Armin Kühne, Luca Bianchi, Dominik Oberholzer, Sarah Mostafa and Michael Kremer

On 31 January 2024, the Swiss Federal Council adopted the amended Collective Investment Schemes Ordinance (CISO), bringing the legal basis for the Limited Qualified Investor Fund (L-QIF) into force as of 1 March 2024. The L-QIF is a new fund category introduced as part of the Collective Investment Schemes Act (CISA) revision of 17 December 2021 exclusively for qualified investors, which is exempt from the authorization and approval requirement. With the implementation of L-QIF, Switzerland aims to promote the innovative capacity of Switzerland as a fund location and strengthen its competitiveness.

1. Introduction

The possible legal forms for an L-QIF are the contractual investment fund, the investment company with variable capital (SICAV), and the limited partnership for collective investment (LP). The L-QIF is based on the Luxembourg legislation on the Reserved Alternative Investment Fund (RAIF). While certain risk diversification principles apply to the RAIF in certain circumstances, they do not apply to the L-QIF. However, the L-QIF must disclose its risk diversification to investors in the fund documents. Certain investment regulations do apply to the L-QIF. However, these are designed to be liberal in light of the lower investor protection requirements of the qualified investor and the deliberate promotion of innovation by the legislator. However, the L-QIF regulations require comprehensive transparency through the disclosure of information in the fund documents. In addition to comprehensive transparency, the CISA requires specific requirements for the management of L-QIFs as a central corrective to the lack of supervision by FINMA. The management must also be performed by institutions supervised by FINMA.

2. Admissible group of investors

In principle, all qualified investors pursuant to Art. 10 para. 3 and para. 3ter CISA may invest in L-QIFs. This notably also includes wealthy private clients pursuant to Art. 5 para. 1 FinSA who declare that they wish to be considered professional clients (opting out) as well as investors with a written investment advisory or asset management agreement pursuant to Art. 10 para. 3ter CISA, provided they have not declared that they do not wish to be considered qualified investors. However, if the L-QIF invests its assets directly in real estate, wealthy private clients are not permitted to invest in the L-QIF (Art. 118a para. 1 lit. b CISA). In addition, it should be noted that the provisions on the acquisition of real...