LIECHTENSTEIN Law and Practice Contributed by: Bernhard Rankl, Nicolai Binkert and Alexander Appel, Schurti Partners Attorneys at Law Ltd
tation involves a certain degree of regulatory uncer- tainty, and is also subject to any future change or more restrictive approach at EU/EEA level. For banks from other EEA member states, it is therefore advisable to passport services to Liechtenstein and, in so doing, avoid the need to invoke the reverse-solicitation prin- ciple. Financing without obtaining a banking license Non-banks can provide financing without obtaining a banking license as long as the financing is not carried out on a commercial basis and not as the main busi- ness of the relevant lender (eg, intra-group lending). It is strongly advisable to specify in the articles that any financing activity shall be confined to internal transac- tions, such as payments to or in favour of sharehold- ers, beneficiaries or subsidiaries, thereby avoiding regulatory licensing issues. 3. Structuring and Documentation 3.1 Restrictions on Foreign Lenders Providing Loans Subject to compliance with regulatory requirements (see 2.1 Providing Financing to a Company ), foreign lenders face no additional restrictions when it comes to lending to borrowers domiciled in Liechtenstein. 3.2 Restrictions on Foreign Lenders Receiving Security There are no legal restrictions or impediments that would specifically apply to foreign lenders when receiving collateral or guarantees. For general restric- tions, see 5.5 Other Restrictions . 3.3 Restrictions and Controls on Foreign Currency Exchange Liechtenstein law does not maintain any restrictions or controls on foreign currency exchange. 3.4 Restrictions on the Borrower’s Use of Proceeds There are no specific restrictions on the borrower’s use of proceeds made available under a loan or debt securities under Liechtenstein law.
However, it should be noted that certain legal enti- ties (most importantly a company limited by shares ( Aktiengesellschaft ) and an establishment ( Anstalt )) are subject to capital-maintenance rules (see 5.2 Down- stream, Upstream and Cross-Stream Guaranties ) which may limit the use of loan proceeds. 3.5 Agent and Trust Concepts The (security) agent concept is commonly used for secured syndicated financings. Consequently, the common security pooling mechanics, in particular through establishing a parallel debt (or similar) struc- ture, are applied in Liechtenstein. However, there is no published Liechtenstein case law that has tested the (security) agent concept. With regard to the pooling of collateral under Liech- tenstein law, a distinction must be made between two different types of security: accessory ( akzessorisch ) and non-accessory ( nicht-akzessorisch ) collateral. Accessory Collateral Accessory collateral (most importantly, the pledge ( Pfandrecht )) is characterised by the existential rela- tionship and linkage of the security to the underlying obligation secured by that security. In particular, this means that the security “follows” the secured claim (eg, if the debt is discharged, the collateral is extin- guished by operation of law) and that the security tak- er may only hold and administer collateral if and to the extent that it is also a creditor of the secured obliga- tion. A security pool with accessory collateral, where the security agent only holds the security interests on behalf of the other lenders without also being a credi- tor of the underlying secured claims, is not permis- sible in Liechtenstein. This structural hurdle is often overcome by implementing a parallel debt, which consolidates the aggregate amount of debt under the financing agreements and is owed by each security provider to the security agent. On the back of this parallel debt, the security agent may hold, administer and enforce the security package on behalf of all other syndicate lenders (including the security agent itself). Non-Accessory Collateral Non-accessory collateral (most importantly, guaran- tees and security assignments/transfers) are not sub- ject to the restrictions described above. Therefore,
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