SWITZERLAND Law and Practice Contributed by: Shelby R du Pasquier, Patrick Hünerwadel, Valérie Menoud and Marcel Tranchet, Lenz & Staehelin
Claims and receivables Security over claims and receivables, such as receiva- bles or rights under contracts, can be taken by means of a security assignment or a right of pledge. In prac- tice, putting in place a security assignment is the typical approach. These arrangements allow for the transfer of the full ownership of collateral assets. The use of the title is, however, contractually limited to the liquidation of the assets in an enforcement scenario and the retention of the proceeds up to the amount of the secured claim. The advantage of this form of security interest resides in the fact that, in the case of bankruptcy of a security provider, the collateral will not fall in the bankruptcy estate of the security provider (see 7.1 Impact of Insolvency Processes ). The assignment for security purposes requires a written agreement between the assignor and the security provider. Bank accounts Where bank accounts are concerned, the typical approach is to work with a right of pledge. One point to consider in connection with bank account security is that the bank will typically have a first-ranking secu- rity interest (and other preferential rights, such as a right of set-off) over its client’s account by virtue of the applicable general terms and conditions. In practice, parties often attempt to obtain a partial or full waiver from the account bank for such priority rights. Where no full waiver is granted – and in order to perfect the then second-ranking security interest – it is required that the bank be given notice. Real estate Where security is taken over real estate, the secu- rity will take the form of a mortgage certificate or a mortgage. No other type of charge on real property is permitted under Swiss law. Mortgage certificates are usually preferred in practice, as they constitute negotiable instruments that can be pledged or trans- ferred for security purposes. A mortgage certificate can take the form of a paperless registered mortgage certificate or a mortgage certificate on paper. Both types of mortgage are created and perfected by an agreement of the parties on the creation of the secu- rity right (by a notarised public deed) and an entry in the land register. Notary and registration fees vary,
Generally speaking, the notification of a debtor is not required to create a secured interest. However, it is advisable to notify, given that a debtor can otherwise validly discharge its obligations into the hands of the security provider. Formal requirements might apply for the security doc- ument to be valid – for example, mortgage arrange- ments must take the form of a notarised deed. Perfec- tion requirements, however, will vary according to the type of security and collateral. Financial instruments With regard to financial instruments (such as shares), a right of pledge is typically granted. The creation of the right of pledge requires parties to enter into a security document. Perfection requirements vary, depending on the type of financial instrument. Certificated finan- cial instruments must be physically transferred to the secured party or the security agent. If the certificates are registered, they must be duly endorsed – typically in blank. A specific regime applies to intermediated securities, which can be pledged either by a transfer of the intermediated securities to the account of the secured party or by virtue of an irrevocable agreement (known as a control agreement) between an account- holder and the depositary institution. Movable assets With regard to movable assets, the most common form of security interests is the right of pledge. The perfection of a pledge requires, in addition to a valid security document, that the security provider trans- fer possession of the pledged asset to the secured party or to a third-party pledge holder. In practice, this often collides with operational requirements and restrictions, meaning that typically no security is taken over movable assets (or is only taken over selected movable assets). This requirement does not apply to publicly registered aircraft and ships. Similarly, a pledge over registered intellectual property rights (eg, patents, designs or trade marks) is typically also registered in the relevant intellectual property register.
609 CHAMBERS.COM
Powered by FlippingBook