Introduction
On the grounds of functionality of the market for collective investment schemes, transparency and investor protection, the rules of the Federal Law on Collective Investment Schemes (Collective Investment Schemes Act [CISA], SR 951.31) or alternatively the Ordnance on Collective Investment Schemes (Collective Investment Schemes Ordinance [CISO], SR 951.311) and the Federal Law on Banks and Savings Banks (Banking Act [BankG], SR 952.0) apply to investment vehicles used in indirect property investment, which are publicly advertised and promoted.
When the initiators of a property company limited by shares publicly advertise to attract capital investors, this begs the question as to whether the company is subject to the provisions of the Collective Investment Schemes Act and the Banking Act.
Schemes regulated by the Collective Investment Schemes Act (CISA)
The following schemes are regulated by the Collective Investment Schemes Act pursuant to Article 2 paragraph 1, regardless of the legal form:
a. Swiss collective investment schemes and persons who manage, hold or market them;
b. foreign collective investment schemes which are marketed in Switzerland;
c. Persons who manage foreign collective investment schemes in Switzerland or from Switzerland;
d. Persons, who market foreign collective investment schemes in Switzerland;
e. Persons who operate foreign collective investment schemes from Switzerland, and are not exclusively qualified investors pursuant to Article 10 paragraphs 3, 3bis or 3ter or are regulated by the relevant foreign law;
f. Persons who represent foreign collective investment schemes in Switzerland.
Legal entities that are not regulated by the Collective Investment Schemes Act (CISA)
The following legal entities are not regulated by the CISA pursuant to Article 2 paragraph 2, lit. a – g:
a. Occupational benefit organisations and aid organisations, including investment trusts;
b. Social insurance institutions and compensation funds;
c. Public-law corporations and public-law institutions;
d. Operational companies that exercise a commercial activity;
e. Companies that comprise one or more companies in a group under the same management through a majority or in another manner (holding companies);
f. Investment clubs, provided their members are capable of safeguarding their own financial interests;
g. Associations and trusts as defined in the Civil Code;
The following are not regulated by the CISA pursuant to Article 2 paragraph 3:
- Investment companies in the form of Swiss companies limited by shares,
- provided they are listed on a Swiss stock market or provided:
a. solely shareholders as defined in the CISA Article 10 paragraphs 3, 3bis and 3ter (per qualified investor) may invest in them; and
b. the shares are registered.
Qualified Investors
Article 6 CISO: Qualified Investors
(Article 10 paragraph 3bis and 3ter CISA)
1, An individual who satisfies one of the following requirements at the time of acquisition of collective investment schemes is considered a wealthy private person as defined in Article 10 paragraph 3bis of the Law:
a. The investor shall provide proof that he or she:
1. has the knowledge that is required to understand the investment risks on account of personal training and work experience or comparable experience in the financial sector; and
2. has assets of at least 500,000 francs .
b. The investor confirms in writing that he or she has assets of at least 5 million Swiss francs
2 The assets as defined in paragraph 1 are considered to be financial assets that are directly or indirectly owned by the investor, in particular:
a. Bank balance on demand or periodically;
b. Trust assets;
c. Securities, including collective investment schemes and structured products;
d. Derivatives;
e. Precious metals;
f. Life insurance policies with a surrender value.
3 In particular, direct investments in real estate, social insurance claims and occupational pension credits are not considered to be financial assets as defined in paragraph 2.
4 Assets as defined in paragraph 1 b may comprise real estate with a maximum value of 2 million francs. Real estate shall be credited at its net value. The net value is assessed on the basis of the market value, minus all the debts that encumber the real estate.
5 The investor shall provide proof of the existence of the assets at the time of acquisition pursuant to paragraph 1.
Preventive Clarification
In order to clarify the uncertain regulatory issue, all that remains is to clarify the preliminary issue if the permit obligation or the regulatory issue with FINMA.
If the legal classification remains unclear, it is advisable to apply to FINMA for the necessary permits to prevent the risk of FINMA classifying the properly company limited by shares as a so-called unapproved institute and officially placing it in liquidation (securities dealing or unauthorised acceptance of public contributions).
The stock market listing is an alternative option.
