Legal and Regulatory

General: Private equity firms investing in Switzerland do not necessarily need to use a Swiss based structure but are generally free to choose the set-up they deem most appropriate for fundraising and investment. The main drivers for the appropriate legal structure are, in a nutshell: (i) the investment vehicle must be tax transparent, i.e., income, capital gains and any other proceeds from the portfolio companies are subject to taxation at the investor level but not at the investment vehicle level (avoidance of double taxation), (ii) the investment vehicle must provide for limited liability, (iii) there must not be any laws or regulations restricting or limiting the investment activities of the private equity fund, and (iv) the investment vehicle can be established as a "closed-end fund".

Although the Swiss Federal Act on Collective Investment Schemes (Kollektivanlagengesetz/Loi sur les placements collectifs) (CISA) which entered into force on January 1, 2007 provides for legal forms that fulfill these requirements, the predominant legal form currently used by private equity firms in Switzerland is still the Anglo-Saxon limited partnership (LLP). Below, we will describe the LLP and the following main other legal forms used in Switzerland: (i) the Swiss limited partnership for collective in-vestments (Kommanditgesellschaft für kollektive Anlagen/la société en commandite de placements collectifs) (Swiss LLP), (ii) the Swiss investment company (Investmentgesellschaft/société d’investissements) (Investment Company) in the form of a Swiss stock corporation, (iii) the Swiss stock corporation investing in venture capital and other risk capital (Risikokapitalgesellschaft/société de capital-risque) (VC Company), and (iv) the Luxembourg société d'investissement à capital risque (SICAR).