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Under Swiss law, domestic investment funds, including hedge funds, are to be organized either as investment companies or multiple investors' contracts. Multiple investors' contracts will be governed by the Swiss Law on Investment Funds, while investment companies are subject to the Swiss Company Law, which is part of the Swiss Code of Obligations. If investment companies are listed on the Swiss Stock Exchange, they will also be subject to the listing rules of the stock exchange.

In the last few years, there has been a strong trend to organize hedge funds as investment companies, partly to avoid the rules of the new Law on Investment Funds, enacted in January 1995.

The stock exchange has enacted additional rules for the listing of investment companies. The purpose of the new listing rules is to regulate the listing of securities issued by investment companies and to ensure an appropriate degree of transparency on the part of these companies. The new listing rules are aimed to close the regulatory gap between the different rules for investment funds and investment companies. The new listing rules therefore do not apply to multiple investors' contracts, which remain under the supervision of the Federal Banking Commission (FBC) and subject to the Swiss Law on Investment Funds.

According to the new listing rules, an investment company is defined as a company, organized according the company law of the Code of Obligations, which has the purpose of generating yields and/or capital gains and does not pursue active entrepreneurial activities.

Some of the major new features of the New Listing Rules are as follows:

  • the three year rule of the general listing rules, whereby a company may only be listed three years after its incorporation, does not apply;
  • investment companies must lay down the principles of their investment policy in their articles of incorporation and the details must be included in a set of rules, which any applicant may obtain from the issuer or an office in Switzerland stated in the listing particulars;
  • the listing particulars must give detailed information on the investment policy, the persons or companies managing the assets and the risks involved; and the specific risks must be disclosed in a prominent place in every publication connected with listing; and
  • investment companies must comply with specific publication requirements; the annual report must provide detailed information, including an inventory of company assets at net asset value and details on investments whose value is difficult to assess; a half-yearly report must be published and the net asset value must be published at regular intervals.

At the beginning of March of this year, investment companies are traded in a special segment and 18 investment companies have already been listed as investment companies under the New Listing Rules. A number of others plan to file an application to be listed.

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