AUSTRIA Law and Practice Contributed by: Philipp Baubin and Stefan Weber, Weber & Co
actions, including acquisition financing transac- tions, consists of: • a pledge of shares; • a global pledge or assignment of receivables (global assignment of existing and future receivables, including intra-group and trade receivables and insurance claims); and • a pledge of bank accounts. A pledge of IP rights may also be of interest, if the relevant Austrian company holds any trade mark or other IP rights of relevant value. Par- ties usually refrain from taking security over real estate in Austria, as registration of a mortgage triggers inappropriately high registration costs. Security over assets is also usually not taken (or is restricted to limited fixed assets of a value exceeding an agreed threshold), as perfection of security over assets typically interferes with using these assets in the ordinary course of busi- ness and the pledgee is required to have cus- tody over these assets). Depending on the practical value of the collateral and the perfection and administrations costs, parties decide which assets will serve as security for the loan on a case-by-case basis. Personal Security In general, the following personal security inter- est may be granted in Austrian loan transactions: • guarantees; • assumptions of debt; • sureties; and • letters of comfort. The most common personal security granted in large acquisition finance or LBO transactions is guarantees. Under Austrian law, a guarantee is an abstract obligation, whereby the guarantor
undertakes to satisfy the creditor in the event that the principal debtor fails to fulfil its obliga- tions. The guarantee is a contract between the creditor and the guarantor. The guarantee is not an accessory and is therefore not dependent on the occurrence and existence of the main claim. Accordingly, only defences arising from the guar- antee agreement itself, as well as objections due to misuse of rights in calling the guarantee, can be raised by a guarantor. While a guarantee by an Austrian company is typically included in the loan agreement (rather than in a separate guarantee document), in rem security is created by entering into separate security agreements. 5.2 Form Requirements Except for mortgage agreements (real estate pledge), none of the Austrian security agree- ments require notarisation or another specific form. Conclusion in writing with uncertified sig- natures is sufficient. 5.3 Registration Process Under Austrian law, only the mortgages (real estate pledge) and IP pledges require registra- tion. The perfection requirements depend on the type of security interest. • Shares: (a) notice to the company whose shares are pledged (limited liability company); (b) physical transfer (in the case of bearer shares of a joint stock corporation); (c) endorsement of the share certificate and physical transfer (in the case of registered shares); or (d) pledge note in the electronic books of the pledgor ( Buchvermerk ).
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