SWITZERLAND Trends and Developments Contributed by: Roger Ammann, David Borer, Johannes A Bürgi and Lukas Wyss, Walder Wyss Ltd.
secured claims and claims incurred by the bank- ruptcy or liquidation estate above unsecured claims. Within the unsecured claims, claims of employees and pension funds rank higher than claims relating to social insurance and tax claims, followed by all other unsecured claims. Only within this last class of claims can debtors freely agree on a ranking amongst themselves by written agreement ( “intercreditor agreement” ). Legal framework Governing law and jurisdiction Small transactions financed by a single or small number of banks are mostly concluded by sim- ple and straightforward Swiss law governed loan agreements in the respective language of the borrower and lender, whereas large (syndicated) financings are mainly based on the English Loan Market Association (LMA) standard agreements including specific Swiss law-related provisions ( “Swiss finish” ) and are governed by English law. Jurisdiction clauses, such as the “courts of England and Wales, situated in London” , are generally binding on Swiss borrowers, with few exceptions provided by the Lugano Convention or the Swiss Federal Private International Law Act (as applicable) or the Swiss debt collection and bankruptcy law. Furthermore, Swiss courts might order preliminary measures even if they have no jurisdiction over the matter itself. Regulatory matters Foreign entities are generally not restricted in financing acquisitions in Switzerland and do not require a licence, unless they fall under the Bank- ing Act or Financial Services Act for other rea- sons or unless the transactions are performed in Switzerland (such as accepting money from the public to refinance themselves).
Lending into Switzerland on a cross-border basis without the physical presence of the lend- er in Switzerland remains generally unregulated, apart from “Lombard (margin) loans” , which are regarded as financial services within the scope of the Financial Services Act, or consumer cred- its, which fall under the Consumer Credit Act. Taxation To ensure that no withholding tax applies to interest payments by a Swiss obligor to foreign investors (currently at a rate of 35%), the “Swiss non-bank rules” must therefore continue to be observed and complied with, meaning that the number of lenders participating in a financing and qualifying as banks must not exceed ten, and that the total of number of creditors of any Swiss obligor that do not qualify as banks must not exceed 20. In addition, special consideration must be given to loans secured by Swiss real estate, as inter- est payments thereunder to non-Swiss resident creditors may become subject to withholding tax at source, unless the lender is located in a jurisdiction that benefits from a double tax treaty with Switzerland providing for a zero rate and the lender qualifies for treaty protection.
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