Capital Markets Briefing

Author:Ms Dunja Koch and Martina Kessler

Since our newsletter of February 2013 advising on the main provisions of the new Collective Investment Schemes Act (CISA) many issues triggered by the CISA have been discussed in the market and brought to the attention of the Swiss Financial Market Supervisory Authority FINMA. The eagerly awaited Circular on the Distribution of Investment Schemes has now been published and the same replaces the old Circular on Public Advertising. As the name of the Circular says, it sets out clearly the fundamental shift under the new CISA to drop the criteria of public distribution vs. private placement and focus on just the distribution itself, or rather, on the type of investor targeted. In this update we summarise the key elements of the CISA described in the new Circular and flag issues worth bearing in mind for foreign funds or financial intermediaries. Distribution or No Distribution As explained in our last newsletter, in principle if not made on the basis of a strict reverse solicitation all kind of offering of, or advertisement for, collective investment schemes, whether foreign or Swiss, are considered to be a distribution under the CISA and trigger the application of the CISA and FINMA regulations. The Circular explains explicitly that the means and forms of distribution are not material, i.e. distribution can be in print or electronically, by direct mails, information sheets, press conferences, road shows, fairs, or information to financial intermediaries for onward mailings, cold calls or personal visits, sponsored events, and all forms of ecommerce including subscription forms sent by email. Importantly the distribution also includes indirect distribution, namely the offering or advertising of managed accounts which can economically be comparable to fund of funds. Lastly, websites can be considered to be a distribution too if they are accessible to investors who are not super qualified investors (see below) or do not have a clear disclaimer that appears before prospective investors enter the site. The Circular confirmed that the funds may rely on the information received by investors. Since the concept of distribution is so wide, it is the status of the actual investors that matters. Under the CISA there are not only qualified and not qualified investors (retail investors). Within the category of qualified investors, there are certain investors which one could call "super" qualified investors. These super qualified investors are regulated financial...

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