In short: managing non-retail pooled funds in Switzerland

Non-retail pooled funds

Available vehicles

What are the main legal vehicles used to set up a non-retail fund? How are they formed?

Open-ended non-retail funds may be set up as contractual funds (FCPs) or as investment companies with variable capital (SICAVs). Closed-ended non-retail funds may be set up as investment companies with fixed capital (SICAFs) or as partnerships for collective investment (LPs).

An LP is a partnership whose sole objective is collective investment. At least one member bears unlimited liability (general partner), while other members (limited partners) are liable only up to a specified amount (limited partner’s contribution). General partners must be companies limited by shares with their registered office in Switzerland. Limited partners must be qualified investors according to the Collective Investment Schemes Act (CISA). An LP may only manage its own investments. An LP conducts investments in risk capital. The investments in companies or projects can take the form of equity capital, lending or mezzanine financing. Other permitted investments generally include construction, real estate and infrastructure projects as well as alternative investments.

Laws and regulations

What are the key laws and other sets of rules that govern non-retail funds?

Investment fund business in Switzerland is governed by:

  • the Collective Investment Schemes Act (CISA);
  • the Collective Investment Schemes Ordinance (CISO);
  • the FINMA Collective Investment Schemes Ordinance (CISO-FINMA);
  • the FINMA Collective Investment Schemes Bankruptcy Ordinance (CISBO-FINMA);
  • the Financial Institutions Act (FinIA);
  • the Financial Institutions Ordinance (FinIO);
  • the FINMA Financial Institutions Ordinance (FinIO-FINMA);
  • the Financial Services Act (FinSA); and
  • the Financial Services Ordinance (FinSO).


In addition, the Swiss Financial Market Supervisory Authority (FINMA), as the competent regulatory body and supervisory authority, has published circulars addressing specific areas of collective investment schemes law.

Market participants must also comply with self-regulation of industry organisations recognised by FINMA as a minimum standard, namely the code of conduct and various guidelines of the Asset Management Association Switzerland (AMAS, formerly Swiss Funds & Asset Management Association (SFAMA)) and the guidelines of the Swiss Bankers Association.


Must non-retail funds be authorised or licensed to be established or marketed in your jurisdiction?

All domestic non-retail funds must be approved or authorised by the Swiss Financial Market Supervisory Authority FINMA (FINMA). Foreign non-retail funds may not be approved for offer to non-qualified investors.


Who can market non-retail funds? To whom can they be marketed?

Marketing of foreign and domestic non-retail funds does not trigger an authorisation requirement for the marketing entity but requires compliance with certain rules of conduct and organisational requirements if a particular marketing activity qualifies as a financial service under the Financial Service Act (FinSA) and is considered as performed in Switzerland.

Non-retail funds may exclusively be marketed to qualified investors.

Ownership restrictions

Do investor-protection rules restrict ownership in non-retail funds to certain classes of investor?

The circle of investors of non-retail funds is limited to the following qualified investors according to the Collective Investment Schemes Act (CISA) and the Ordinance on Collective Investment Schemes (CISO):

  • professional clients within the meaning of the Financial Service Act (FinSA), namely:
    • financial intermediaries as defined in the Banking Act, the Financial Institutions Act and the CISA (eg, banks, securities firms, fund management companies, managers of collective assets, portfolio managers and trustees);
    • regulated insurance companies as defined in the Insurance Supervision Act;
    • foreign financial intermediaries and insurance companies subject to prudential supervision as institutions listed above;
    • central banks;
    • public entities with professional treasury operations;
    • pension funds with professional treasury operations and other occupational pension institutions providing professional treasury operations;
    • companies with professional treasury operations;
    • large companies that reach at least two of the following thresholds: a balance sheet of 20 million Swiss francs, turnover of 40 million Swiss francs or equity of 2 million Swiss francs, regardless of whether they have professional treasury operations; and
    • private investment structures established for high-net-worth individuals with professional treasury operations.
  • high-net-worth individuals and their investment structures without professional treasury operations who have confirmed in writing that they have at least 2 million Swiss francs of eligible financial assets, or confirmed that they have at least 500,000 Swiss francs in eligible financial assets and demonstrates that their knowledge is sufficient to understand the risks of the investments due to their education and work experience or a similar experience in the financial sector; and who have declared that they wish to be treated as professional clients under the FinSA (opting out); and
  • private clients to whom a regulated financial intermediary as defined above or a foreign financial intermediary subject to equivalent prudential supervision renders discretionary portfolio management services or advisory services in the context of long-term relationships.


The professional treasury operations requirements are fulfilled if at least one internal or external qualified person with experience in financial matters is entrusted with managing the liquid financial assets within the framework of a professional cash or treasury management on a permanent basis.

Any investor that is not a qualified investor is a ‘non-qualified investor’.

Professional clients that opt in to private client status remain qualified investors for the purpose of the CISA.

The specific fund regulations may provide for additional restrictions in individual cases (eg, for tax exemption reasons).

Managers and operators

Are there any special requirements that apply to managers or operators of non-retail funds?

The requirements that apply to managers or operators of non-retail funds are essentially the same as for retail funds. The general authorisation requirements for managers and operators of funds apply.

In the case of single investor funds (for regulated insurance companies, public entities with professional treasury operations or pension schemes with professional treasury operations and other occupational pension institutions providing professional treasury operations), the fund management company of an FCP or SICAV may delegate the investment decisions to the single investor. The Swiss Financial Market Supervisory Authority FINMA may exempt them from the duty to subject themselves to supervision for managers of collective assets.

Tax treatment

What is the tax treatment of non-retail funds? Are any exemptions available?

Swiss tax law does not generally differentiate between domestic retail funds and non-retail funds. Taxation depends on the type of legal structure of the fund. The various types of domestic fund can be classified into two groups: FCPs, SICAVs and LPs; and SICAFs.

The first group is viewed in a transparent manner from a Swiss corporate income tax perspective. These types of funds are not subject to Swiss corporate income taxes on their income or gains. The fund’s income is taxed in the hands of the investors. An exception applies to income derived from directly owned real estate that is subject to corporate income tax at the fund level. A domestic fund holding real estate situated in Switzerland may, nevertheless, be tax exempt for the purpose of corporate income tax if its investors consist exclusively of tax-exempt pension schemes or social security institutions and compensation funds.

Profit distribution or accumulated profits from non-distributing (annual deemed distribution) FCPs, SICAVs and LPs are subject to a withholding tax at 35 per cent. If such distributions or accumulated profits derive from real estate or capital gains, no withholding tax is due, provided that they are reported separately. The withholding tax on the distribution or accumulated profits can be reclaimed by Swiss investors if they declare the income in their tax return or account for it in their financial statements.

Non-resident investors may qualify for an exemption from Swiss withholding tax under the affidavit procedure or may reclaim the withholding tax in full, if at least 80 per cent of the fund’s earnings are foreign-sourced. If foreign-sourced earnings amount to less than 80 per cent, a non-resident investor can reclaim Swiss withholding tax based on an applicable double taxation treaty between Switzerland and its country of residence.

The second group is treated identically to any other corporation in Switzerland and, therefore, is not tax transparent for any type of tax. SICAFs are subject to corporate income tax and tax on net equity, and their distributions (but not accumulated profits) to shareholders are subject to withholding tax at 35 per cent.

In principle, regarding capital and income taxes, Swiss legislation does not distinguish between investments in a domestic or a foreign fund. In both cases, investments are subject to capital tax, distributed or accumulated income is subject to income tax, while capital gains are tax-free for investors holding their assets for private investment purposes.

Asset protection

Must the portfolio of assets of a non-retail fund be held by a separate local custodian? What regulations are in place to protect the fund’s assets?

Fund management companies of FCPs, SICAVs and SICAFs must entrust the safekeeping of assets to a custodian bank. Custodian banks must be authorised banks according to the Swiss Banking Act and have an appropriate organisational structure to act as custodian banks for funds. Unlike depositories and paying agents, custodian banks must, in addition to their banking licence, be authorised as such by the Swiss Financial Market Supervisory Authority FINMA (FINMA).

In the case of a SICAV that is exclusively open to qualified investors, FINMA may, under certain conditions, grant exemptions to appoint a custodian bank.

The role of a custodian bank includes holding fund assets on deposit, issuing and redeeming units, and handling payments processing and ensuring that the fund management company or SICAV comply with the regulations.

A custodian bank may delegate the safekeeping of fund assets to regulated third-party custodians and collective securities depositories in Switzerland or abroad, provided this is in the interest of efficient safekeeping and is appropriate. Any change of custodian bank requires prior FINMA authorisation.

If a custodian bank becomes bankrupt, the assets held by it in custody are not included in the bank’s bankruptcy estate. Instead, the assets (except cash) are segregated from the bank’s bankruptcy estate in favour of the fund management company of an FCP or of a SICAV, subject to any claims by the custodian bank against the respective depositor.

In the case of bankruptcy of a fund management company of an FCP, assets and rights belonging to the fund will be segregated in favour of the investors. Debts of the fund management company that do not arise under the fund contract may not be set off against claims of the investment fund.

LPs do not have to deposit the fund’s assets with a Swiss custodian bank or any other regulated institution. Therefore, the assets are generally not subject to special treatment in the event of the fund’s bankruptcy. However, if the assets are held with a Swiss bank within the meaning of the BA, the assets deposited with that bank are, in the case of the bank’s bankruptcy, subject to the same rules as open-ended funds.


What are the main governance requirements for a non-retail fund formed in your jurisdiction?

Any party responsible for the management of funds and the safekeeping of assets held in it must obtain authorisation from the Swiss Financial Market Supervisory Authority (FINMA). 

If there is a change in the circumstances underlying the authorisation, FINMA’s authorisation must be sought prior to the continuation of activity. The following must be reported to FINMA without delay:

  • changes to organisational and corporate documents;
  • changes in the persons responsible for the management and business operations and of significant equity holders;
  • facts that might call into question the good reputation or the guaranteeing of proper management by the persons responsible for the management and business operations (eg, criminal proceedings);
  • facts that might call into question the good reputation of significant equity holders or the prudent and sound business practice of the licensee owing to the influence of significant equity holders;
  • change of executive persons entrusted with the performance of the custodian bank’s duties; and
  • any change regarding minimum capital, capital adequacy and financial guarantees.


Persons managing, representing or safekeeping assets of funds and their agents must fulfil the following statutory conduct rules:

  • duty of loyalty: they must act independently and exclusively in the interest of the investors;
  • due diligence: they must implement organisational measures that are necessary for proper management; and
  • duty to provide information:
    • they must ensure the provision of transparent financial statements and provide appropriate information about the funds that they manage and distribute and the assets that they hold in safekeeping;
    • they must disclose all charges and fees incurred directly or indirectly by the investors and their appropriation; and
    • they must notify investors of compensation for the distribution of funds in the form of commission, brokerage fees and other soft commissions in a full, truthful and comprehensive manner.


Persons providing a financial service within the meaning of the Fincanial Service Act (FinSA) related to funds must comply with the rules of conduct and organisational requirements under FinSA.

The statutory conduct rules are complemented by self-regulation of industry organisations that FINMA has recognised as minimum standards, particularly the Code of Conduct of the Asset Management Association Switzerland (AMAS, formerly Swiss Funds & Asset Management Association (SFAMA)), as well as several guidelines.


What are the periodic reporting requirements for non-retail funds?

Generally, the same rules apply as for retail funds. 

The Swiss Financial Market Supervisory Authority FINMA may, upon request, fully or partially exempt non-retail funds from certain reporting requirements under the Collective Investment Schemes Act (CISA) (eg, the duty to publish a semi-annual report or to publish prices). Exemptions must be established in the fund regulations.