Since March 2024, Switzerland has had the L-QIF, a fund for qualified investors that needs no FINMA approval. The catch, as we explained in our L-QIF guide, is that it must be managed by an institution FINMA supervises directly. For most promoters, that means one thing: getting a manager of collective assets licence.
There are two ways to get there. One is slow and clean. The other is fast and, most of the time, smarter. And sometimes the fast one is a trap. Here is how to tell the difference.
Route one: start from scratch
You incorporate a new company, build the organisation, recruit the team, write the business plan and file with FINMA. In our experience, a complete file takes 9 to 12 months from start to licence. FINMA has no legal deadline for these licences, so that estimate is practice, not a promise.
During that time, the company cannot manage anything. No clients, no revenue, no track record. You are paying a team to wait.
Route two: buy a portfolio manager, operate at once, then upgrade
The alternative is to acquire a company that already holds a FINMA portfolio manager licence and upgrade it to manager of collective assets. Our estimate here is 3 to 6 months for the upgrade, depending on the file and the change of people.
The real advantage is not only the shorter timeline. It is what you can do while you wait.
You start working on day one. A Swiss portfolio manager may already manage collective assets under the so-called de minimis rule (art. 24 para. 2 FinIA), provided the investors are qualified and the assets stay within one of two limits:
- CHF 100 million in total, including assets acquired through leverage; or
- CHF 500 million in total, with no leverage and no redemption right for investors during the first five years.
So while the upgrade file is with FINMA, the company already manages individual mandates and qualified-investor funds within those limits. Each month of the upgrade is a month of fees, not a month of waiting.
One honest limit. Within the de minimis rule, you can manage funds, but you cannot yet manage an L-QIF: that requires an institution supervised directly by FINMA. Once the upgrade comes through, a manager of collective assets can manage an L-QIF set up as a limited partnership. The other L-QIF forms, the contractual fund and the SICAV, require a fund management company.
When the licence lands, you are not launching from a blank page. You have a team, clients, assets under management and a record of results. For FINMA too, an upgrade carried by a company that already operates properly is a stronger file than a promise on paper.
How we structure the ownership change
In a recent proposal to buyers of a Zug portfolio manager, the new owners were three partners. The sequence we recommended:
- Stage one: the three partners join as minority shareholders, each with a stake below the qualified participation threshold, and take their places in management and on the board.
- Stage two: the company files the upgrade, with the new team and their business plan at the heart of the file.
- Stage three: once the upgraded licence is granted, the remaining shares are transferred to the partners.
This is not a way around FINMA. Partners acting together are assessed together, and the people who will run the company are vetted in the upgrade itself. The point is sequencing: the seller stays in place to keep the licence alive, the buyers prove themselves inside the company, and the final transfer happens once the licence the buyers actually want exists.
When the upgrade is the wrong answer
An upgrade has one feature people forget: you are not buying a licence, you are buying a company. With its history.
When you ask FINMA for a higher licence, it does not only look at your future. It looks at everything the company has done so far: its clients, its controls, its anti-money laundering record. A good history is an asset. A bad one follows you into the file.
The Bitcoin Suisse lesson
Bitcoin Suisse is a Crypto Valley pioneer, founded in 2013 and for years one of the reference names in Swiss crypto. It operated under a self-regulatory organisation for anti-money laundering, not under direct FINMA supervision.
In July 2019, it applied to FINMA for a banking licence, together with a securities dealer licence, from its existing company. In March 2021, FINMA told it the application was not approvable as it stood and that the prognosis was unfavourable, citing among other things indications of weaknesses in its money laundering defences. Bitcoin Suisse withdrew the application.
Compare that with the two crypto applicants of the same period that started from scratch, SEBA and Sygnum. Both were licensed as banks in 2019.
The lesson is simple. Bitcoin Suisse was a successful, profitable company. But six years of fast growth under a lighter regime meant FINMA was reviewing that whole past. A new company, built to banking standards from day one, would have started with a clean file. The history that made Bitcoin Suisse a pioneer was exactly what slowed it down.
Upgrade or start fresh: our test
Before choosing, we ask five questions about the existing company:
- Anti-money laundering record: have past audits or the supervisory organisation flagged anything?
- Client base: does it include high-risk clients, sectors or jurisdictions that FINMA will want explained?
- Ownership: are the current and future shareholders clean and fully documented?
- Organisation: are risk management and compliance real, or only on paper?
- Fit: does the business you want to build actually match what the company has done so far?
Five clean answers: buy and upgrade, and you save six months or more. One serious problem: start fresh. Cleaning up a company’s past in front of FINMA usually takes longer than building a new one.
What nobody tells you
The fastest licence is the one FINMA has no reason to question. Sometimes that is an existing company with a clean record and a short upgrade. Sometimes it is a new company with no history at all. Choosing the wrong one costs far more than the price of the shell.
Read the full series
This article is part of our series on launching and managing funds in Switzerland:
- The L-QIF: Switzerland’s fund without FINMA approval, and what it really requires
- Who counts as a qualified investor in Switzerland? The gate to the L-QIF
- Managing funds in Switzerland: manager of collective assets or fund management company?
- Buy and upgrade, or start fresh? The fastest route to a Swiss CISA licence (you are reading it)
- Buying a Swiss regulated company: what to check before you sign
Thinking about buying a Swiss portfolio manager, or launching an L-QIF? Ask us which route fits your project, or write to insight@fintechlex.com.
This article is for general information only and does not constitute legal advice.
