Distribution Agreement Private Equity

Understanding each market in Europe, any country regulation and the applicable distribution channel is essential to defining its distribution strategy. Each executive should prepare for their entry into the European market and reframe their product on the destination countries. Understanding the different target markets also means analyzing the main distribution channel. Depending on the country, investors have their preferences with the marketing intermediary and although banks are used in southern European countries, platforms and consultants are preferred in some others. The latest regulatory developments (Mifid II, AIFMD) aim to improve investor protection and limit or avoid the use of reverse solvency as a distribution strategy. Swiss Distribution AgreementA distribution contract must be concluded between the Swiss representative and, as a general rule, the investment manager who acts as a distributor. There is also an agreement to distribute SFAMA models that Swiss representatives want to use or take into consideration. The distribution contract does not have to be bipartisan, so the fund could also participate or, if necessary, the manager and the investment manager. As a distributor, the investment manager is required to comply with two sets of guidelines established by SFAMA and approved by the Swiss regulator as minimum standards. It includes guidelines for the distribution and collection and publication of royalties and expenses. A 12B-1 levy is the main royalty of funds related to the marketing and distribution of the fund. The 12B-1 levy is an annual marketing and distribution fee paid to the distributor.

If a fund is distributed exclusively to eligible regulated investors (see item 4 below), the new CISA/CISO requirements do not apply. On the other hand, if a fund is to be distributed to unregulated investors (see 5 below), the new CISA/CISO requirements apply. These new requirements include, among other things, the Fund`s designation of an approved representative in Switzerland and a Swiss bank as a paying agent, certain mandatory information for Swiss investors and entry into a Swiss-compliant distribution agreement (see item 7 below).