Collective investment scheme vs. operating company / Decision of the Federal Supreme Court of November 5, 2010

In case of doubt a collective investment subject to authorization will be assumed.

In its decision 2C_571/2009 the Federal Supreme Court was asked to resolve whether a Swiss company is to be qualified as a collective investment scheme or as an operating company carrying out entrepreneurial activities. Such distinction is highly relevant because collective investment schemes need to be authorised by the Swiss Financial Market Supervisory Authority FINMA whereas operating companies do not.

The Supreme Court held that the company in question was a collective investment scheme. The decision highlights the difficulties to draw a line between operating companies and collective investment undertakings and does not substantially eliminate the legal uncertainties entailed therewith. Simultaneously it sets the clear signal that in cases of doubt courts will consider a company a collective investment scheme subject to registration and authorization duties, rather than an operating company not subject to such obligations.

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