Sfama Model Distribution Agreement

How does Swiss law regulate the distribution of non-Swiss funds in Switzerland? The marketing and sale of non-Swiss funds to Swiss investors is governed by the Collective Investment Schemes Act (KAG) and the Collective Investment Schemes Act (KGG). Overall, there are two regimes: one regulates the distribution of funds to non-qualified investors and the other governs the distribution to qualified investors. Carnegie Fund Services (CFS) provides integrated representation services to foreign investment funds distributed to qualified and non-qualified investors in Switzerland. Our representation services include, among other things, requesting and maintaining FINMA`s authorisation of UCITS funds for distribution to all types of investors, creating and maintaining the representation of hedge funds for distribution to qualified investors in Switzerland, including the negotiation and implementation of distribution contracts, distributor monitoring, distribution support and the cfS Market Radar Service. A Swiss Representative Agreement must be specified by the Fund with an authorized Swiss representative. The role of the Swiss representative is to represent the fund and to be the interlocutor of Swiss investors and the Swiss regulatory authority FINMA. Note that there is a standard sfAMA (Swiss Funds and Asset Management Association) representative agreement that Swiss representatives wish to use or take into consideration. It is permitted that the fund manager or investment manager is also a party to the agreement. In the event of repeated or gross infringements, the distribution contract must be terminated and informed by FINMA. As regards disclosure requirements, the provisions on distributors provide that the distributor acts exclusively in the interest of the investor. Under that rule, the rules applicable to distributors list the obligations to be complied with when the distributor markets collective investment schemes in direct contact with the investor, when individual advice is provided, followed by the rules to be complied with when collective investment schemes are distributed electronically or otherwise without direct contact with the investor. The directives aim to ensure high quality standards in the Swiss collective investment scheme market in terms of investor information and advice. They are part of the self-regulatory regime of the Swiss fund industry and complement and define the provisions on the distribution of collective investment schemes in the Code of Conduct for the Swiss Fund Industry published by SFAMA.

8 CIS distribution in Switzerland Distribution to „Qualified Investors“ Target investor Location of the distributor Outside or within the scope of the KAG Requirement to the distributor Obligation to the fund Regulated qualified investor Switzerland or outside Switzerland Out of scope (Art. 3.1 KAG) N/A Qualified investor not regulated under the CAC or foreign law outside Switzerland Out of scope (Article 2, paragraph 1, lit. e KAG a contrario et art. 1 CISO) Unregulated qualified investor Required as part of the „appropriate supervision“ of the distributor + distributor license (Art. 19 para. 1bis KAG Art. 30a KAG)* No registration with FINMA, but Swiss representative and paying agent Name of the non-misleading fund (Art. 120 para. 4 KAG) + authorisation required as a distributor (Art. 19 para. 1a, Art. 30a KAG) On the other hand, an investment manager has direct contact with these documents related to investors and/or sends fund documents or materials to investors, this is likely to be a distribution and should be avoided unless the investment manager has appointed a Swiss representative and paying agent and has taken steps to ensure that the investors concerned are qualified (e.g.

B that wealthy individuals have chosen to do so). . . .