AUSTRIA Law and Practice Contributed by: Markus Fellner, Stefan Sallat and Florian Henöckl, Fellner Wratzfeld & Partner Rechtsanwälte GmbH
Non-banks may generally only engage in the lending business in Austria if and to the extent that such activ- ity would be exempted from a banking licence for an Austrian entity – eg, by way of the acquisition of loan portfolios by special securitisation purpose entities. Anyone who provides loan financing on a commer- cial basis to companies without the required banking licence is not entitled to any remuneration associated with these transactions, in particular interest and com- missions. Conflicting agreements as well as sureties and guarantees associated with these transactions are legally invalid. 3. Structuring and Documentation 3.1 Restrictions on Foreign Lenders Providing Loans In terms of absolute restrictions on granting loans, subject to the fulfilment of the regulatory criteria (see 2.1 Providing Financing to a Company ), there are no specific restrictions on foreign lenders intending to provide debt financing to Austrian borrowers. 3.2 Restrictions on Foreign Lenders Receiving Security There are no legal impediments or restrictions for receiving securities or guarantees which would devi- ate from the rules that would apply to an Austrian lender. 3.3 Restrictions and Controls on Foreign Currency Exchange There are no restrictions, controls or other concerns on and regarding foreign currency exchange which would deviate from the rules that would apply to an Austrian creditor. 3.4 Restrictions on the Borrower’s Use of Proceeds There are no restrictions on the borrower’s use of pro-
vertrag ), which may be combined with the granting of a power of attorney ( Stellvertretung ), as well as the possibility of certain rights being held by a trustee in its own name but for the account of a third party (trustor). As a consequence, agency and trust concepts are frequently used in the documentation of Austrian law-governed loans in the form of customary security agency agreements. A certain degree of complexity (and potential insecu- rity) is entailed by these structures since Austrian civil law differentiates between so-called accessory secu- rities ( akzessorische Sicherheiten ) and non-accessory securities ( nicht-akzessorische Sicherheiten ), whereby the former provide for a stringent link between the existence/validity of the security and the underly- ing (secured) claim. By way of example, pledge (and mortgage) agreements are strictly accessory so that any defect of the underlying legal relationship (such as the invalidity of the loan claim) as well as the (full) redemption of the claim would automatically result in the lapse of the relevant security right. While struc- tures providing for accessory security rights (such as pledges) being granted to a security agent (which typi- cally hold parts of, but not the entire, loan claim) are customary in Austria these have not been tested (or expressly accepted) by the courts. This risk does not apply to so-called non-accessory security, which includes (inter alia), the transfer of prop- erty for security purposes ( Sicherungsübereignung ). These uncertainties are known by domestic, and widely accepted by foreign, participants in the Aus- trian lending market and the relevant qualifications are customarily included in (enforceability) legal opinions as a standard market practice. 3.6 Loan Transfer Mechanisms Austrian civil law recognises the concept of assign- ment, pursuant to which lenders’ rights (but not obli- gations) may generally be unilaterally transferred from the original or former creditor (assignor) to a new creditor (assignee). However, there are regula- tory limitations to this procedure stemming from the fact that Austrian banking secrecy ( Bankgeheimnis )
ceeds from loans or debt securities. 3.5 Agent and Trust Concepts
Austrian civil law recognises the necessary concepts in order to implement agent and trust structures in Austria in the form of an agency agreement ( Auftrags-
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