The L-QIF draft law was adopted by the Council of States with a substantial majority by 41 votes to 0 (with 1 abstention) on 9 June 2021. The bill is a crucial step for the Swiss financial sector as well as the fund & asset management industry in particular, and will increase Switzerland’s ability to be innovative as well as its competitiveness as a fund location.
L-QIF in a nutshell
The essence of the limited qualified investor fund (L-QIF) is to provide a flexible collective investment scheme under Swiss law, which can be set up considerably faster and more cost-effectively due to the elimination of the FINMA approval. The L-QIF will only be open to qualified investors under the Collective Investment Schemes Act (CISA), offers a Swiss alternative to similar foreign fund structures and is most comparable to Luxembourg’s RAIF.
The launch of the new fund structure will not include the introduction of a new legal structure. Instead, it will be possible to launch an L-QIF in the form of an existing Swiss fund structure, namely a contractual fund, an investment company with variable capital (SICAV) or a limited partnership for collective investment (LPCI or KmGK).
Although the L-QIF provides a lot of flexibility and for example does not include any restrictions on possible investments or risk diversifications, the quality and security which investors have become accustomed to is guaranteed. In particular, L-QIFs can only be managed by financial institutions supervised by FINMA, meaning that e.g. an L-QIF in the form of a contractual fund can therefore only be managed by a fund management company, which can in turn delegate investment decisions to a Swiss manger of collective assets or a foreign manager of collective assets (if subject to an appropriate supervision in its country of domicile).
As with Luxembourg’s RAIF, it will be possible to convert the L-QIF into a fund structure regulated and supervised by FINMA at a later point in time. It will therefore be possible for market participants to quickly and cost efficiently set up fund structures in the form of an L-QIF and, where required, convert them into regulated fund structures.
The bill is currently expected to take effect in early 2023.
Outlook and how PwC can support
The L-QIF will facilitate the launch of funds for qualified investors in a fast, uncomplicated and cost-effective manner. For qualified investors from Switzerland, this can represent a favourable alternative. Furthermore, L-QIFs could play a significant role in particular for alternative investments and in the area of real estate development.
We are pleased to support interested market participants, such as fund management companies and managers of collective assets, in the evaluation and analysis of the relevant options and in the preparation of the required documentation.