Swiss law requires at least one authorised representative to reside in Switzerland. This provides considerable flexibility to create the desired control and economic arrangements amongst the principals and key employees of the manager. Corporations can also restrict the transferability of registered shares.
Alternatively, Swiss law also permits the issue of ‘participation certificates’ which are similar to shares but do not have any voting rights. Shares are generally entitled to vote but the bylaws of the corporation can establish that the right is not accorded proportionally to the par value, allowing weighted voting. In either case, shareholders’ liability is limited to any unpaid amount on their shares. The capital stock is divided into shares which can be bearer or registered shares. However, a hedge fund manager applying for a licence must normally have a minimum paid-up capital of CHF200,000. Corporations must be capitalised with a minimum of CHF100,000 of which at least 20% of each share and at least CHF50,000 must be paid up. Managers will also need to comply with Swiss anti-money laundering procedures by registering with the relevant self-regulatory organisation.Ī corporation is the most commonly used vehicle for an asset manager in Switzerland. Major shareholders of the manager must also be able to demonstrate their good reputation and that their influence is not likely to detract from prudent and sound management.
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The principals must also have sufficient professional qualifications to perform their activities and enjoy a good reputation. The fund manager must fulfil certain obligations, notably (a) insuring an adequate organisation, particularly in areas of risk management, internal controls and compliance, (b) offer sufficient financial guarantees, and (c) run its activities with due loyalty, care and transparency to investors. Application for the licence must be submitted to the Swiss Financial Market Supervisory Authority (FINMA). There is no obligation under Swiss law to obtain a licence to manage an offshore fund, although an offshore fund manager based in Switzerland may, if it wishes to, apply for a licenceif (i) the laws of the offshore fund’s place of incorporation permit the manager to be located in another jurisdiction but require that the manager is subject to a foreign supervisory authority and (ii) the offshore fund is subject to supervision comparable to that of Switzerland. This article looks at the practicalities of relocating to Switzerland, focusing on Geneva and Zurich as chosen destinations.ĭo I need to obtain a regulatory licence? Those who wish to stay in continental Europe are likely to consider Switzerland which combines not only physical proximity to the EU but also stability, favourable tax conditions and an established financial services sector. Whilst there are a number of options, including going fully “offshore” and setting up in the Channel Islands or the Caribbean, most managers are looking at moving to onshore jurisdictions where they will be subject to a degree of regulation and tax but also benefit from the infrastructure and facilities of an onshore jurisdiction. A potent combination of high marginal income tax rates, an increasingly hostile approach to non-domiciled individuals and the proposed Directive on Alternative Investment Fund Managers (the AIFMD) is causing a number of managers based in London to consider relocating to a non-EU jurisdiction.
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