SLOVENIA Law and Practice Contributed by: Markus Bruckmüller, Klemen Radosavljević and Matej Kraner, Wolf Theiss Attorneys-at-law
become exercisable only upon the occurrence of certain critical events of default, most nota- bly bankruptcy proceedings or other events indi- cating severe credit deterioration. Intercreditor agreements often address the involvement of hedge counterparties in lender decision-making, typically by granting them limited voting or con- sultation rights concerning enforcement actions or amendments to intercreditor terms. However, in many cases, the scope of these rights is lim- ited to prevent excessive influence in relation to their exposure. 5. Security 5.1 Types of Security Commonly Used The most common types of security used in Slovenia include guarantees, mortgages over real estate, pledges over movable property, shares and intellectual property rights, as well as pledges or fiduciary assignments of receivables and transfers of title to certain types of movable property. With regard to the form and registration requirements of the assets listed below, refer to 5.2 Form Requirements and 5.3 Registration Process . Shares The most common form of security in Slovenia is a pledge on the shares of a joint-stock cor- poration ( delniška družba (d.d.)) or limited liabil- ity company ( družba z omejeno odgovornos - tjo (d.o.o.)). The pledgee may sell the secured assets if the borrower defaults on the relevant secured obligations and use the proceeds to satisfy the debt. In principle, security is also given over rights attaching to or arising from the (company) shares, including the right to receive dividends and other distributions. Typically, the security documentation would also include spe- cial powers of attorney under which the pledgee
has the right to vote in the name and on behalf of the pledgor at any shareholders’ meeting and under which the pledgee has the right to sell the shares (in or out of court) in the event of an event of default. Real Estate A mortgage ( hipoteka ) is the only form of security over real estate. Mortgage can only be created over real estate registered in the land register ( zemljiška knjiga ). A mortgage may also be cre- ated over ancillary rights ( izvedene pravice ) to the real estate, such as a building right ( stavbna pravica ) or a right of usufruct ( pravica do užitka ). The mortgagee may sell the secured assets in foreclosure proceedings if the borrower defaults on the relevant secured obligations and use the proceeds to satisfy the debt up to the amount for which the mortgage was granted. In cases where mortgages secure the financing of real estate portfolios, it is common for them to be created in a comprehensive form in the form of a joint mortgage where all properties secure the obligations ( skupna hipoteka ). Maximum mortgage ( maksimalna hipoteka ) is a form of a mortgage where the parties agree on a maximum amount to which the property may be encumbered (including principal, interest, costs, etc). Movable (Tangible) Assets The most common form of security over mov- able (tangible) assets is a pledge (except for reg- istered movable assets, ie, registered ships, air- craft and registered networks consisting of one or more cables or pipelines over which a mort- gage is established). A pledge may be granted in the form of (i) a possessory pledge, in which case the pledgee must become the possessor ( posestnik ) of the relevant movable property in order to perfect the pledge, or (ii) a non-posses-
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