Security Interests in Liechtenstein Law

Liechtenstein law provides various forms of security interests that can be used to secure liabilities and protect assets. In this article, we will delve into the specifics of pledges, security assignments, floating charges, and downstream, upstream, and cross-stream guarantees.

Pledges

Pledges are a common form of security interest in Liechtenstein law. They can be created over various types of assets, including:

• Shares
• Founder’s rights
• Bank accounts
• Movable assets

The pledge agreement does not require any specific formalities, but the perfection requirements must be fulfilled for each type of asset.

Security Assignments

Security assignments are used to secure liabilities and are often preferred by lenders as they transfer full title to the receivable to the lender. However, the lender is limited in disposing of the receivable, as any disposal outside of an enforcement scenario would violate the security agreement and potentially lead to damage claims from the assignor.

Floating Charges

Liechtenstein law does not permit floating charges or similar universal security interests over all present and future assets of a company. Each asset must be clearly identified or at least identifiable, and security cannot be created over a generic pool of assets.

Downstream, Upstream, and Cross-Stream Guarantees

These types of guarantees are subject to capital maintenance rules in Liechtenstein law. Generally, companies are prohibited from disbursing their assets to or for the benefit of direct or indirect shareholders/holders of founder’s rights, except in specific cases like dividend payments, share capital reductions, or liquidation proceeds.

Conclusion

The specifics of security interests in Liechtenstein law can be complex and may have far-reaching implications. It is advisable to consult with a legal professional familiar with Liechtenstein law for accurate guidance on securing interests within the country.