SWITZERLAND Trends and Developments Contributed by: Roger Ammann, David Borer, Johannes A Bürgi and Lukas Wyss, Walder Wyss Ltd.
thus directly involve the account bank as party to the pledge agreement, instead of merely inform- ing it about the existence of a pledge. Claims and receivables A common type of security is the assignment of claims, especially of the target, where they con- stitute a substantial part of the target’s business. Security over receivables is mostly taken by way of a general assignment and can also include future claims if they are clearly identifiable. Prior to the assignment, it is of paramount importance to make sure that the contracts underlying the claims do not contain a clause prohibiting the assignment of the claim (pactum de non ceden- do). It is even recommended to explicitly state in important finance documents (such as the share purchase agreement) that assignments of claims resulting therefrom are allowed. As with the pledging of bank account claims, it is also recommended in the case of assignments of claims and receivables to notify the debtors of the assignment of such claim or receivable, as otherwise they can still discharge their obligation in good faith via payment to the assignee. Real estate Swiss law does not generally provide for any fil- ing, registration or approval requirement in con- nection with the creation of security. An excep- tion applies to security over real estate, which is usually created by way of taking security over mortgage certificates ( Schuldbriefe ), establish - ing a personal claim against the debtor secured by a property lien. Alternatively, a mortgage assignment ( Grundpfandverschreibung ) can be used to secure a debt. The advantage of the lat- ter is that it can be used to secure any type of debt, even future or contingent debt. However, in contrast to the pledge or transfer of a mort-
gage certificate, a mortgage assignment does not constitute a negotiable security, which is why mortgage securities are more common in practice. The creation of a new mortgage certificate requires a notarised deed and an entry into the land register, but such certificates are then freely transferable without further notarisation or land register entry. When security is provided over real estate, tax law implications must be considered in each case. If the borrower is a Swiss entity, real estate should only be used as security for those for- eign lenders situated in countries with favour- able double taxation agreements with Switzer- land (so-called Swiss treaty lenders), as loans secured by real estate are subject to withholding tax at source. The same issue exists for foreign borrowers but can usually be settled by obtain- ing a respective tax ruling. Intellectual property Intellectual property rights are normally only con- sidered to serve as security if they are material to the business of the security provider or its group companies and are of certain value. Intel- lectual property such as trade marks, patents or designs can be taken as security by way of a pledge or security transfer. A written agreement is sufficient to create the security. Nonetheless, it is highly recommended that the security be registered in the relevant public register due to its publicity function and to provide the security holder with a stronger claim in case of enforce- ment. Movable assets Under Swiss law, the creation of a security inter- est over movable assets can generally only be achieved if such assets come into the sole pos-
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