ANDORRA Law and Practice Contributed by: Elena Redondo, Albert Hinojosa and Marc Ambrós, Cases & Lacambra
• A first-ranking mortgage over the target real estate asset. • A pledge over the shares of the company holding the target real estate asset (usually an SPV). • A pledge on the company’s bank accounts (over the bank account balance and the bank account itself), usually complemented by periodical cash-sweeps, limits for maximum- free disposal amounts or minimum-unavail - able amounts and disposals subject to the consent of the financing entity. • A pledge granted over credit rights deriv - ing from any income-producing agreement entered into by the borrower and related to the specific real estate asset. In a non- exhaustive manner, a pledge may be created over insurance policies, lease agreements or hedging agreements. The key point is that such agreements generate liquid, due and payable credit rights in favour of the borrower. The creditor shall notify the counterpart of each pledged agreement in an enforcement scenario to receive any payments due or positive-balanced set-off rights deriving from the pledged credit rights. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders Lending is subject to the reservation of activity within Andorra, and it can only be carried out by local banks authorised to operate as such by the Andorran Financial Authority ( Autoritat Financera Andorrana – AFA). Therefore, direct lending granted by foreign lenders to finance an acquisition of commercial real estate assets located within Andorra is not allowed, as it would result in a breach of the reservation of activity regime. However, indirect lending (ie, granting financing to a foreign entity that will acquire the real estate asset located in Andorra) would be allowed.
The recently enacted FIRRMA has expanded the scope of transactions subject to the Commit - tee’s review by granting CFIUS the authority to examine the national security implications of a foreign acquirer’s non-controlling investments in US businesses that deal with critical infrastruc - ture, critical technology, or the sensitive personal data of US citizens. Therefore, FIRRMA grants the Committee the authority to limit the transac - tions that are subject to its review by providing that it “shall specify criteria to limit the applica - tion of such clauses to the investments of cer - tain categories of foreign persons” and that such criteria shall take into consideration “how a for - eign person is connected to a foreign country or foreign government” . FIRRMA does not single out any specific country. CFIUS’s authorities may be applied to address the national security risks posed by foreign investment in the US, regardless of where the investments originate. Therefore, FIRRMA will also apply to investments made from Andorra to the US. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security Notary fees are generated concerning the grant - ing and enforcement of security over real estate (usually a mortgage or a pledge) to benefit from a priority over other creditors in an insolvency scenario. No documentary taxes or registration fees are generated in connection with the granting and enforcement of security over real estate assets. 3.5 Legal Requirements Before an Entity Can Give Valid Security Other than the limits on financial assistance out - lined in 3.1 Financing Acquisitions of Commer- cial Real Estate , no legal rules or requirements
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