The Swiss representative and Swiss paying agent

The regulations on the distribution of funds in Switzerland have changed. Fund providers need to assess their existing or planned distribution activities in Switzerland, and decide if they need to appoint a Swiss representative and a Swiss paying agent. OpenFunds briefly summarizes the requirement for a Swiss representative and a paying agent and terms that apply to the requirement and explains the respective roles.

Requirement for a Swiss representative and paying agent
In all cases where shares of foreign collective investment schemes are distributed in Switzerland, it is necessary to appoint both a Swiss representative and a Swiss paying agent. The requirement applies both to shares of foreign collective investment schemes and to limited partnerships distributed before and after the new regulations come into force on 1 March 2013. A Swiss representative and a Swiss paying agent will also be needed for shares of foreign collective investment schemes that start being distributed after new regulations take effect on 1 March 2013.
According to Swiss Fund & Asset Management Association (SFAMA) Circular the main features include:
– A description of the investment policy
– An outline of the fees charged
– Details of the main service providers, e.g. the investment manager, the administrator, etc.

If the pre-marketing is successful and a Swiss based investor chooses to invest in the fund, the requirement for a Swiss representative and a Swiss paying agent applies for as long as that Swiss based investor remains invested. In the case of a closed-end vehicle, this will be for the life of the fund; in case of an open-ended fund, as long as the fund continues to be distributed in Switzerland.
It is worth taking stock of the most important basic requirements for foreign funds catering to qualified investors only:
1.Foreign funds do not require FINMA approval
2.Foreign funds require a representative and a paying agent in Switzerland
3.Foreign fund documentation must include notes on distribution in Switzerland
4.Distribution must be based on a distribution agreement between the representative and the respective authorized distributor
5.Distribution within Switzerland by foreign financial intermediaries requires Swiss distribution authorization unless distribution activities are deemed to be appropriately supervised in the intermediary’s country of domicile.

Role of the Swiss representative
The Swiss representative is responsible for ensuring distribution activities comply with Swiss law. The representative is a regulated, FINMA licensed entity, and must ensure a smooth flow of information between the fund and Swiss investors and FINMA. Most importantly the representative is on the other hand responsible for the compliance of the distributors with Swiss law. The Swiss representative is responsible for ensuring distribution activities comply with Swiss law.

Role of the paying agent
The paying agent’s main role is to receive investors’ subscriptions and distribute any payments due to investors.