SWITZERLAND Trends and Developments Contributed by: Roger Ammann, David Borer, Johannes A Bürgi and Lukas Wyss, Walder Wyss Ltd.
Furthermore, these types of security can be extended on the target level by: • security over shares in subsidiaries; • the assignment of intercompany receivables and trade receivables; • security over real estate; and • intellectual property. Most of the above-mentioned security can already be provided pre-closing, except for a share pledge over the shares in the target com- pany, which can only be perfected after the acquisition of its shares. The same applies for guarantees of material group companies of the target group, which can only be granted upon accession. The security at target level is there- fore often structured as a condition subsequent. Security over shares and quotas Shares in stock corporations ( Aktiengesells - chaften ) and quotas in limited liability compa- nies ( Gesellschaften mit beschränkter Haftung ) are generally pledged rather than assigned to avoid the assignee (or the security agent in the case of syndicated financings) becoming the formal share or quota-holder with full legal title. The perfection of the pledge requires a written agreement and usually also provides for the handing over of the share or quota certificates. Therefore, it is standard to issue share or quota certificates if none had been issued thus far, and to endorse or duly assign them in blank. If share or quota certificates are issued, the transfer of the certificates that have been duly endorsed or assigned in blank is required for the perfection of the security. If the company’s articles of association contain restrictions on the transfer of the shares or quo- tas, it is advisable to amend the articles in this regard and lift the transfer restrictions, which will
give a potential third-party acquirer more con- fidence than a mere board resolution approv- ing the transfer of the pledged shares or quo- tas because such resolution may be changed or amended at any time. The issuance of share or quota certificates and the amendment of the articles of association can be structured as con- ditions subsequent. Bank accounts For the same reason shares or quotas are com- monly pledged instead of assigned or trans- ferred, bank accounts or, more precisely, the claims an account holder has against a bank are pledged rather than assigned, even though the latter would be permitted under Swiss law as well. It is a perfection requirement for the secu- rity to notify the account bank after the bank account pledge agreement has been entered into. In addition, it is common practice to request a waiver from the account bank regarding its pri- ority claims it may have over the bank account in question according to its general terms and conditions. Another argument against the assignment of a bank account holder claim is that account banks have become more concerned about know-your- customer and beneficial owner identification matters, which are relevant if a claim is assigned (thereby concluding a full legal transfer), whereas a pledge only provides for a limited right in rem. However, for the opposite reason, some account banks are not prepared to accept a pledge and threaten to terminate the client relationship and close the respective bank account because they cannot fully identify the ultimate beneficial owner behind a pledgee. One feasible solution to avoid the risk of termination of a client–bank relationship is to enter into a tripartite agreement between the bank involved, the pledgor and the security agent (in syndicated financings), and
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