Setting up an investment fund in Switzerland implies respecting various requirements. One of the ways in which an investor can establish a fund here is through an investment company with variable capital (SICAV). In order to incorporate a SICAV, the businessmen will have to meet several requirements and our team of Swiss lawyers can assist in this procedure.
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The main characteristics of the SICAV company in Switzerland
SICAV is short for French Societe d’investissement acapital variable and is a type of Swiss limited liability company with variable capital created for collective investment purposes. This type of organization is usually employed by open-ended investment funds.
To meet FINMA’s criteria, SICAVs must meet certain conditions about the value of its assets. The assets must be held by a custodian bank. Unlike a SICAF, which must always hold a fixed amount of capital, a SICAV can have fluctuating capital. Another distinction is that SICAVs are not required to hold enough money to cover the nominal value of their shares.
Our law firm in Switzerland can offer more information about the characteristics of this legal form.
SICAV, an open-ended retail fund in Switzerland
Foreign investors who want to establish a business in Switzerland can invest in a SICAV, which falls under the category of open-ended retail funds, signifying that the future company will not be limited to the issuance of a certain amount of shares.
In order to register a SICAV or another type of fund in Switzerland, the investor will need an approval from the Swiss Financial Market Supervisory Authority (FINMA).
FINMA provides the regulatory framework for the activity of funds in Switzerland and it is also the main body which authorizes these legal entities. It is important to know that a SICAV in Switzerland can be structured as an umbrella fund, which refers to the creation of various sub-funds within the main fund that can have different investment strategies. An important aspect in this situation is that each particular sub-fund will need an approval from FINMA in order to carry its investment policies; our team of Swiss attorneys can offer assistance on the legislation referring to umbrella-funds.
SICAV authorization in Switzerland
The registration of a SICAV company in Switzerland will imply the same steps as for any other business form. Among the requirements to meet are:
- having a legal address in Switzerland;
- opening a Swiss bank account;
- having local management;
- having Articles of Association created and authenticated.
However, apart from these similitudes to companies established for commercial purposes, the SICAV must obtain authorization from FINMA.
The following are the specific authorization and approval requirements for Swiss SICAVs:
- they must have at least CHF 5 million in assets one year following their launch;
- the company name must include a description of its legal structure, or the acronym “SICAV”;
- the ratio of corporate shareholder deposits to total assets must be reasonable;
- company and investor shares without a nominal value and freely transferable must be paid up in cash;
- their investment regulations must be defined;
- they must establish whether they will be self-managed (meaning it manages its own administration and may delegate portfolio management duties) or externally managed;
- their main purpose is to administer the funds/sub-funds;
- they must hold a specific amount of equity capital.
Also, according to Articles 26 and 34 of the Financial Institutions Act, it is forbidden for Swiss SICAVs to provide services to third parties.
Should you decide to open a company in Switzerland as a SICAV we recommend using our legal services for compliance purposes. Our Swiss lawyers can handle the creation of the entire documentation in this sense.
Why register a SICAV in Switzerland?
SICAVs are incorporated in order to provide collective capital investment schemes. A Swiss SICAV can be managed by its founders or it can also be coordinated by a fund management company.
The assets of the fund have to be maintained by a custodian bank which has to respect the following:
• be a Swiss bank;
• received an authorization from FINMA.
Taxation of SICAVs in Switzerland
With respect to the taxation of such companies, here are the most important highlights:
- profit distribution or accrued profits from non-distributing SICAVs are subject to a 35% withholding tax;
- if the distributions or cumulative profits are from real estate or capital gains, no withholding tax is owed as long as they are reported separately;
- non-resident investors may be eligible for an exemption from Swiss withholding tax or they may reclaim it in full if at least 80% of the fund’s earnings are foreign-sourced;
- if foreign-sourced revenues are less than 80%, a non-resident investor can reclaim Swiss withholding tax under an applicable double taxation treaty between Switzerland and the country of residency.
Businessmen interested in receiving more details on the registration of a SICAV in Switzerland can address to our Swiss law firm for legal assistance.