Here is the article in markdown format:
Security Assignment Agreement Requirements in Liechtenstein Law
This article provides an overview of the security assignment agreement requirements in Liechtenstein law, including formalities, perfection requirements, and notable exceptions.
Security over Assets
- The security assignment agreement does not require specific formalities.
- Security is perfected by handing over the founder’s rights certificate to the pledgee and notifying the establishment.
Bank Accounts
Pledges over bank accounts are typically created under a bank account pledge agreement, which has no requirements regarding formalities. The general terms and conditions of Liechtenstein account banks usually provide for a (first-rank) pledge over all assets credited or otherwise transferred to accounts held with that bank.
- Pledge agreements for bank accounts have no specific formalities.
- Bank account pledge agreements often include provisions for a first-rank pledge over all assets in the account.
Receivables
Security over receivables is created through pledges or assignments for security purposes. From the lender’s perspective, assigning full title to the receivables is more advantageous and frequently used.
- Security over receivables is created through pledges or assignments.
- Assigning full title to the receivables is often preferred by lenders.
Movable Assets
Pledges of movable assets are made under a pledge agreement with no formalities required. Physical assets subject to a pledge must be handed over to and remain with the pledgee (Faustpfandprinzip) as a perfection requirement.
- Pledge agreements for movable assets have no specific formalities.
- The pledgee must receive physical possession of the movable asset.
Real Estate
Security interests over real estate located in Liechtenstein are taken in the form of a mortgage or mortgage certificate, which has strong formalisation requirements. The documentation for a mortgage or mortgage certificate is strictly regulated and only the template agreement published by the Liechtenstein Office of Justice can be used.
- Security over real estate requires a mortgage or mortgage certificate.
- Strict formalities apply to mortgages and mortgage certificates in Liechtenstein.
Floating Charges and/or Similar Security Interests
Floating charges or other universal security interests over all present and future assets of a company are not permitted under Liechtenstein law. The assets to be charged must be clearly identified, or at least identifiable.
- Floating charges are not permitted under Liechtenstein law.
- Assets subject to a security interest must be clearly identified.
Downstream, Upstream and Cross-Stream Guarantees
Financing that involves forward loans, security for liabilities of direct or indirect shareholder(s), or affiliated entities other than subsidiaries may breach applicable capital maintenance rules. Exceptions include transactions carried out on an arm’s length basis or where a subsidiary secures a loan granted to its shareholder which is then passed on to the subsidiary.
- Certain types of financing may breach capital maintenance rules.
- Exceptions apply for certain types of transactions, including those conducted at arm’s length.