Swiss collective investment schemes

May 18, 2022

Regulation of collective investment schemes (more frequently known as ‘investment funds’, ‘mutual funds’, or ‘funds) requires that the fund contract and any amendments to an existing one must obtain a prior FINMA approval. A common contractual fund or CCF is an investment vehicle that is conditioned on a fund contract between the unit holders which stipulates the rights and duties of the investing parties, asset management firm, and custodian.

What are the regulations for approval?

Under Article 15 of CISA, FINMA is obliged to ratify the contract of mutual funds. If a fund consists of subfunds, every subfund must obtain independent approval. The regulatory permit must also be received prior to any new subfunds organized within an existing mutual fund.

Mutual funds are divided into many categories. Consequently, there is no need to detail the key requirements for validity. To sum up, neither subfunds can be created nor units for a subscription can be organized until it is not approved by the Regulator.

Amendments to the fund contract

According to Article 27 of CISA, an asset management firm must provide proposed amendments with the custodian’s consent to the Regulator to get approved. For this reason, an overview of the changes should be disclosed in due course, and parties must be notified and granted the amended document for free.

Also, investors must be notified that they can communicate with FINMA within thirty days of amendments disclosure to claim any disapprovals or offers and may reconsider their units in cash, according to the conditions of the contract or regulatory requirements.

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