What legal structure does KAPITAL uses?
KAPITAL structures Special Purpose Vehicles ("SPV") in Luxembourg, by turning alternative assets such as private company stocks or alternative funds into marketable securities in the form of Investment Notes. Specifically, the vehicles used to structure investments via KAPITAL act as a security issuers under the Luxembourg Securitisation Act 2004 & the Luxembourg Fiduciary Act 2003.
What Swiss regulations does KAPITAL comply with when issuing securities?
Investments structured via KAPITAL are considered financial marketable securities and generally fall under the Swiss Federal Act on Financial Services.
Are SPVs structured via KAPITAL require a prospectus or registration with FINMA in Switzerland ?
Investments structured via KAPITAL are generally considered passive investments and are not considered as Swiss Collective Investment Scheme. KAPITAL provides Advisory services as part of a transaction, where a professional registered advisor is appointed. In Switzerland, financial securities can be marketed without the need for further regulation or a prospectus under certain exemptions, one of which is the private placement exemption. This exemption allows issuers to offer securities to a restricted group of investors, such as professional investors or high-net-worth individuals, without the requirement for a prospectus or extensive regulatory oversight.
Generally, securities offered to the Swiss public (ie: retail investors) must be registered with the European regulator and require a prospectus.
Can non-accredited Retail Investors invest via KAPITAL?
No, generally KAPITAL does not issue investment to Retail Investors. Except on rare occasion where the appropriate adjustment is made and relevant registration, disclaimers and prospectus are prepared, KAPITAL does not provide investment structuring intended to non-professional, non-accredited retail investors.
What is the difference between Retail Investors & Professional Investors?
Retail Investors are typically buying publicly available financial products (ie: listed on Public Stock Exchange) and are subject to higher levels of protection by the regulators due to presumed lower financial sophistication. Professional Investors are generally investment firms, or smaller entities and individuals that meet high net worth or income criteria, allowing them access to private, higher-risk investment opportunities not available to the general public.
What is the Swiss definition of Professional Investors?
Under Swiss laws like the Financial Services Act (FinSA), a 'professional investor' refers to certain people or organizations that meet the following criteria :
- Regulated Financial Intermediaries:
- Banks
- Securities firms
- Fund management companies
- Asset managers of investment schemes
- Central banks
- Regulated Insurance Institutions:
- Insurance companies
- Public Entities and Retirement Institutions:
- Governments (national and regional)
- Public entities like government departments
- Pension funds and similar retirement institutions
- Companies managing their finances professionally
- Companies with Professional Treasuries:
- Large corporations managing their finances like financial experts
Individuals or entities can also be considered professionals if:
- High-net-worth individuals agree in writing that they understand investment risks after assessment by a financial expert.
- They have a written agreement with a financial expert categorizing them as professional based on their financial knowledge and experience.
Opt-out and Exclusions for Swiss Investors:
- Professional clients can choose to be treated as private clients for more protection.
- Even if they qualify, institutions can opt-out to get non-professional client protections.
This system helps simplify financial services by recognizing different levels of investment knowledge. Regulated intermediaries, insurers, and big corporations are seen as having enough expertise for certain investments. Others can qualify if they show they manage investments professionally."
As a Swiss Investor, how is my investment held via KAPITAL considered?
Based on the assessment from our lawyer PYTHON, investments made via KAPITAL are considered to be Securities (titre de valeur mobilière) structured as Investment Notes. Generally, Swiss investors are considered to hold their interest in the underlying asset directly.
What accounting method is used for KAPITAL's SPVs?
KAPITAL uses two different valuation methods, based on the type of investment made in a SPV and the ongoing reporting on the Net Asset Value ("NAV").
- For direct private company stocks, where fluctuation in valuation is difficult to assess in between financing rounds; KAPITAL uses the Luxembourg Generally Accepted Accounting Principles ("LUX GAAP") method at-cost and with impairment.
- For VC/PE Fund investments or real-estate investments, the valuation is prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and prepared by a professional accounting firm registered with the Financial Sector Supervisory Commission ("CSSF") in Luxembourg as Professional of the Financial Sector ("PSF").
How are currency exchange handled?
Generally, currency exchange are handled by the bank of the subscribing Investor. For each transaction, assets and liabilities denominated in currencies other than the base currency of each investment are translated into the base currency at the exchange rate prevailing at the transaction date.
What document will KAPITAL provide for my annual tax return?
KAPITAL provides an annual statement on the status of each investors portfolio at year end. This statement will include for each investment made:
- The date of investment;
- The amount invested;
- The name of the underlying asset;
- The type of underlying asset;
- The % ownership within each specific SPV;
- Any change in the asset valuation at year end;
How should I report my investments as part of my annual tax return?
KAPITAL cannot provide tax or legal advice. Instead, we provide investors with a standardised annual statement (see above) which investors can share with their own accountant in order to prepare their tax return.
Please note that the taxation of an investment might vary based on the underlying asset you're investing into; therefore it is always recommended to seek independent professional opinion before investing or when deemed necessary.
