By the end of 2022, asset managers already in operation must have submitted an application for authorization to a supervisory organization (via the FINMA platform). However, to avoid any delays, it is strongly recommended that the application be submitted well in advance, as the supervisory organization must also review it before it is forwarded to FINMA. There are currently five different supervisory organizations that oversee asset managers (https://finma.ch/de/bewilligung/aufsichtsorganisationen/).
The law now generally requires asset managers to have two managing directors. This raises the question for asset managers who have operated as sole proprietors until now: what is the best course of action?
Such sole-proprietor asset managers must implement a contingency plan. This means that the asset manager must demonstrate that, in the event of their absence, business operations for clients can continue or that a proper liquidation can be carried out.
Such proof may be provided through a cooperation agreement with a third party.
Such a cooperation partner must be at least one financial institution subject to equivalent supervision (typically a legal entity). The cooperative relationship must already be contractually established at the time the license is granted.
When entering into a liquidation agreement, contractual arrangements must also be made with a cooperation partner. However, the cooperation partner need not be a licensed financial institution for the purposes of the liquidation; it must simply possess the professional expertise to carry out a liquidation (e.g., an attorney or a trustee).
However, this fallback solution is just one of the challenges that sole asset managers face during the licensing process. Another important issue is the internal control system, which pertains to risk management and compliance. Sole proprietor asset managers must also have these organizational control mechanisms in place. Here, a balance must be struck between self-regulation and outsourcing these functions to third-party providers.
For this reason, we strongly recommend addressing these issues early on in the approval process. LezziLegal is, of course, always available to assist you with practical solutions.
Do you have any questions about this topic, or would you like a personal consultation? Write to us—we’re happy to help.
