SWITZERLAND Law and Practice Contributed by: Shelby R du Pasquier, Patrick Hünerwadel, Valérie Menoud and Marcel Tranchet, Lenz & Staehelin
3. Structuring and Documentation 3.1 Restrictions on Foreign Lenders Providing Loans With the exception of consumer credit activities, for- eign lenders are not – as a general rule – restricted from granting loans to Swiss-based borrowers under Swiss law (see 2.1 Providing Financing to a Com- pany ). Certain Swiss tax law points should be consid- ered, in particular where security is taken over Swiss real estate assets (see 3.2 Restrictions on Foreign Lenders Receiving Security ). 3.2 Restrictions on Foreign Lenders Receiving Security There are no generally applicable Swiss law provi- sions restricting or prohibiting the granting of secu- rity or guarantees to foreign lenders in Switzerland – for example, there are no restrictions on the basis of national interest. That said, depending on the nature of the collateral, the type of security interest and the industry sector, specific restrictions may apply or may impact the enforcement of the security interest by a One noteworthy example of such restrictions are real estate financing transactions in Switzerland. The background is that the acquisition of Swiss real estate assets by foreign investors or foreign-controlled com- panies is subject to restrictions under the Swiss Fed- eral Law on the Acquisition of Real Estate by Persons Abroad (the so-called Lex Koller). In particular, residential properties can only be acquired by foreign investors or foreign-controlled companies if a licence is issued (and such licences are granted on limited grounds). This generally cov- ers both direct investments in residential real estate and acquisitions of shares in a residential real estate company. The concept of acquisition under the Lex Koller is such that it also includes secured financings by foreign lenders if those financings exceed certain thresholds – in particular, loan-to-value thresholds. The acquisition of commercial property, by contrast, is subject to fewer restrictions, which mainly concern premises that: foreign secured creditor. Real Estate Financing
• are empty; • contain residential parts; or
• are acquired in anticipation of expansion plans but without concrete plans to build at the time of acquisition. In addition to this Lex Koller point, a Swiss tax at source can apply where the security package for a financing by foreign lenders includes Swiss real estate assets. Exceptions apply if the foreign lenders act through jurisdictions with a double taxation treaty that provides for full exemption from such tax. Regulated Sectors In certain regulated industries – for example, the financial sector (in particular, banking), telecommuni- cations, nuclear energy, media and aviation – share- holders and controlling interests in companies active in the sector may be subject to review and approval by the competent Swiss authority, with a view to ensur- ing proper business conduct and, as the case may be, reciprocal rights for Swiss investments abroad. Such restrictions can also apply in the case of secured financings to companies in such sectors. 3.3 Restrictions and Controls on Foreign Currency Exchange There are no restrictions or controls on foreign cur- rency exchanges or on the import and export of capi- tal under Swiss law. 3.4 Restrictions on the Borrower’s Use of Proceeds There are no specific statutory restrictions on a Swiss borrower’s use of proceeds from loans or debt securi- ties under Swiss law. Parties do, however, generally agree contractually on the permitted use of funds. 3.5 Agent and Trust Concepts Swiss law does not provide for specific rules govern- ing the use of agency or trust structures in the context of secured lending transactions. However, such con- cepts are recognised and commonly used in practice. As a rule, it is possible under Swiss law that security be granted to, and held by, an agent or trustee and for security documents to be drafted in such a way that
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