1. GUARANTEE
    1. Can a guarantee be granted by one entity/person to secure obligations of another entity/person?  
    2. Is guarantee treated under the law as: 
    3. a type of security?
    4. a financial service?
    5. Can a corporate guarantee be granted:
    6. Upstream?
    7. Downstream?
    8. Lateral?
    10. Are there any formal requirements or practical recommendations for the execution, validity and/or enforceability of a guarantee?
  2. PRINCIPAL OBLIGATIONS
    1. Is it possible for a guarantee/security to secure future obligations?
    2. Is the validity of a guarantee/security dependant on the validity of a principal (guaranteed/secured) obligation? Does the concept of indemnity exist or would be recognised under the law?
    3. Can guarantee/security be continuing for as long as guaranteed/secured obligations remain outstanding or shall it have a definite term? 
    4. Can guarantee / security be granted to a foreign creditor?
    5. Is it possible for a guarantee and/or security to be created by way of parallel debt/trust/agent structures?
    6. In case of transfer of guaranteed/secured liabilities to a new creditor (partially or fully), what are the formalities required to ensure that the guarantee/security package is maintained in favour of a new creditor?
    7. In case of any changes to guaranteed/secured obligations (including a change of a principal debtor, adding another debtor), what are the formalities required to ensure that the guarantee/security package is maintained in favour of a creditor?
    8. Are there any restrictions regarding the governing law of a guarantee/security?
    9. Are there any restrictions regarding submission of disputes under guarantee/security to foreign courts’ jurisdiction or to arbitration?
    10. Are there any currency control/capital movement restrictions with respect to guarantees, security or loans?
    11. What is the hardening period with respect to guarantee/security?
  3. SECURITY
    1. Is it possible to have security over:
    2. Is it possible to create security over multiple assets by one security document? Is floating security possible?
    3. Can a security be granted to secure liabilities of a holding company, a shareholder, a subsidiary or any other affiliate?
    4. In order to be enforceable against third parties, must a security/security agreement be:
    5. Notarised?
    6. Registered?
    7. Executed in/translated into local language?
    8. Other?
    9. Does registration in most cases protect the secured creditor against the debtor’s subsequent dealings with the collateral?
    10. How is the priority/rank of security established?
  4. EXECUTION AND PERFECTION MECHANICS, TIMING AND COSTS
    1. Can a guarantee/security be executed by way of e-signing?
    2. Are registers of guarantees/encumbrances over movable/immovable assets publicly available and accessible online?
    3. Which party shall/can apply for registration of security in a relevant register?
    4. What documents need to be submitted and in what form for the guarantee/security registration with a relevant register?
    5. How much time and cost does it take to:
    6. check if any encumbrances over collateral exist (i.e. obtain extracts)
    7. register/deregister/amend/remove an encumbrance in a relevant register?
    8. notarise (if required) a security document?
    9. comply with other perfection requirements?
  5. SECURITY ENFORCEMENT
    1. The right to enforce security arises when:
    2. the secured debt is unpaid and due?
    3. there is any other breach under the principal obligation agreement?
    4. there is any other breach of the pledge/security agreement?
    5. the debtor or guarantee/security provider becomes insolvent?
    6. any other grounds?
    7. Is there any mandatory period for curing a default and/or any other formalities to be fulfilled before proceeding to enforcement?
    8. Is out-of-court security enforcement available? Is any additional instrument for direct enforcement required?
    9. Which out-of-court enforcement methods are available and how the collateral value is determined thereunder:
    10. taking over the title to the collateral?
    11. selling collateral to a third party by way of direct sale or private or public auction?
    12. notarial writ?
    13. other?
    14. Are powers of attorney or any other (conditional) instruments used to facilitate an out-of-court enforcement by a secured party? Are they mandatory or recommended?
    15. Is there anything else of which a creditor should be aware as unusual or particularly difficult?
    16. Is security enforcement in practice: generally easy, fairly easy or complicated?–more debtor- or creditor-friendly or balanced? –quick, average or long in terms of timing?
    17. Are there any upcoming changes to guarantee/security regulations/rules? 

jurisdiction

Switzerland
Add jurisdiction

GUARANTEE

1. Can a guarantee be granted by one entity/person to secure obligations of another entity/person?  

Yes.

2. Is guarantee treated under the law as: 

2.1 a type of security?

Yes. 

2.2 a financial service?

No.

3. Can a corporate guarantee be granted:

3.1 Upstream?

Yes, under certain conditions (see 4 below).

3.2 Downstream?

Yes, if the subsidiary is solvent and has no negative equity.

3.3 Lateral?

Yes, under certain conditions (see 4 below).

4. Are there any special aspects to be taken into account in relation to granting a guarantee (e.g. financial assistance, transfer pricing, corporate benefit, any other limitations)?

Granting an upstream/lateral guarantee is limited by Swiss law provisions on capital maintenance and profit distribution.

The board of directors of the company granting a guarantee has an obligation to act in the interest of that company. For Swiss tax purposes, the Swiss guarantor is obliged to collect an arm’s-length guarantee fee.

5. Are there any formal requirements or practical recommendations for the execution, validity and/or enforceability of a guarantee?

There are no formal requirements. However, in an international context, the guarantee should be countersigned by the beneficiary in order for the jurisdiction clause to be valid and binding.

PRINCIPAL OBLIGATIONS

6. Is it possible for a guarantee/security to secure future obligations?

Yes, as long as the future obligations are sufficiently determinable.

7. Is the validity of a guarantee/security dependant on the validity of a principal (guaranteed/secured) obligation? Does the concept of indemnity exist or would be recognised under the law?

Unlike a Swiss suretyship, a Swiss guarantee in accordance with article 111 of the Swiss Code of Obligations is valid irrespective of the validity of a principal obligation. The concept of indemnity (as known under English law) does not exist under Swiss law.

8. Can guarantee/security be continuing for as long as guaranteed/secured obligations remain outstanding or shall it have a definite term? 

Yes, a security can continue for as long as any secured obligations are outstanding or set forth a definite term. 

9. Can guarantee / security be granted to a foreign creditor?

Yes, but there are restrictions in limited circumstances, e.g. security interests in real estate may be restricted.

10. Is it possible for a guarantee and/or security to be created by way of parallel debt/trust/agent structures?

Yes, it is possible and usual to use a “parallel debt” concept where a security agent acts on behalf of the secured parties. However, the parallel debt structure has not been tested under Swiss law and there is no assurance that such structure will be effective before a Swiss court.

11. In case of transfer of guaranteed/secured liabilities to a new creditor (partially or fully), what are the formalities required to ensure that the guarantee/security package is maintained in favour of a new creditor?

This depends on the type of security granted.

12. In case of any changes to guaranteed/secured obligations (including a change of a principal debtor, adding another debtor), what are the formalities required to ensure that the guarantee/security package is maintained in favour of a creditor?

In the event of substantial changes, amendment agreements are common.

13. Are there any restrictions regarding the governing law of a guarantee/security?

As a rule, the parties are free to choose the governing law of the security documents (with certain exceptions, such as mortgage). In practice, it is market standard that security documents over assets in Switzerland are governed by Swiss law and provide for jurisdiction in Switzerland.

14. Are there any restrictions regarding submission of disputes under guarantee/security to foreign courts’ jurisdiction or to arbitration?

If immovable property in Switzerland is involved, the parties cannot choose the competent jurisdiction. 

15. Are there any currency control/capital movement restrictions with respect to guarantees, security or loans?

To the extent that the entering into, or the settlement of, payment obligations is in breach of the currency exchange regulations of a country that is a member of the International Monetary Fund, these obligations might not be enforceable in Switzerland.

16. What is the hardening period with respect to guarantee/security?

One year if the debtor granted the guarantee/security without receiving adequate consideration or was already over-indebted when the debtor provided the guarantee/security. Five years if the debtor provided a guarantee/security with the intention to disadvantage (certain) creditors.

SECURITY

17. Is it possible to have security over:

a. bank accounts;Yes.
b. receivables;Yes.
c. IP rights;Yes.
d. shares (public or a private company, listed or not listed);Yes.
e. rights in a company (other than shares);Yes.
f. insurance rights;Yes.
g. inventory (goods in turnover);Yes, but it is generally burdensome and costly. 
h. equipment/plant/machinery/other movables;Yes, but it is generally burdensome and costly. 
i. goodwill;No. 
j. real estate property (other than land);Yes (real property).
k. land;Yes (real property).
l. objects under construction (object of unfinished construction);Yes. 
m. lease rights to real estate, including land;n/a.

18. Is it possible to create security over multiple assets by one security document? Is floating security possible?

Security is to be established under different agreements depending on the type of asset. Floating security is a concept unknown under Swiss law, as the assets and rights to be covered by the security interest must be clearly identified or identifiable.

19. Can a security be granted to secure liabilities of a holding company, a shareholder, a subsidiary or any other affiliate?

Yes, but granting a security interest to secure the liabilities of affiliates other than subsidiaries (upstream and lateral security) is subject to restrictions, see 4 above.

20. In order to be enforceable against third parties, must a security/security agreement be:

20.1 Notarised?

Depends on the secured assets.

20.2 Registered?

Depends on the secured assets.

20.3 Executed in/translated into local language?

Translation into the local language is required for security that must be notarised or registered, and may be required by a local court in the case of enforcement.

20.4 Other?

The perfection of a pledge or a transfer for security purposes over movable property (other than aircraft, ships and some other exceptions) requires the movable property to be transferred into the physical possession of the secured party or an agent acting for it. 

a. bank accounts;Swiss account banks often have a right of pledge and a right of set-off. Unless the account bank waives the right of pledge and the right of set-off, it ranks senior to the security of the secured creditors and the pledge over the account bank receivables is only valid if notified to the account bank
b. receivables;Notification of third-party debtors is not a perfection requirement. If the third-party debtors, before having been given notice of the security, pay in good faith to the security provider, the respective debts will be validly discharged.
c. IP rights;These are enforceable towards good-faith third parties only on the pledge being registered with the relevant intellectual property register.
d. shares (either of a listed company or a private company);The perfection of a security interest over certificated shares requires the secured party to obtain physical possession of the share certificates. If no share certificates are issued, perfection requires a written pledge, transfer or assignment agreement. Specific rules apply to security interest over intermediated (book-entry) securities.
e. rights in a company (other than shares);The perfection of a security interest over rights requires the secured party to obtain physical possession of the rights certificates. If no certificates exist, perfection requires a written pledge, transfer or assignment agreement.
f. Insurance rights;Physical insurance policies need to be handed over to the secured party. 
g. Inventory;The perfection of a pledge or a transfer for security purposes over movable property requires the movable property to be transferred into the physical possession of the secured party or to a security agent.
h. Equipment/plant/machinery;The perfection of a pledge or a transfer for security purposes over movable property requires the movable property to be transferred into the physical possession of the secured party. As this is usually impossible regarding operating assets, this is an uncommon type of security in Switzerland.
i. Goodwill;N/A.
j. Real estate property (other than land);Taking a security interest over real estate usually takes the form of a transfer for security purposes of a mortgage note. Foreign secured lenders should pay attention to possible restrictions deriving from the Swiss Federal Law on the Acquisition of Real Property by Foreigners. 
k. Land;

Taking a security interest over real estate usually takes the form of a transfer for security purposes of a mortgage note.

Foreign secured lenders should pay attention to possible restrictions deriving from the Swiss Federal Law on the Acquisition of Real Property by Foreigners.

l. Objects under construction (object of unfinished construction).Taking a security interest over real estate usually takes the form of a transfer for security purposes of a mortgage note.
m. lease rights to real estate, including land;n/a

21. Does registration in most cases protect the secured creditor against the debtor’s subsequent dealings with the collateral?

Yes, in the limited cases where registration is available (real estate, aircraft, ships, etc.). 

22. How is the priority/rank of security established?

The priority/rank of the security generally depends on the date of establishment. Regarding real estate, its ranking is indicated in the land registry.

EXECUTION AND PERFECTION MECHANICS, TIMING AND COSTS

Establishment of security and level of security regulation is generally:

Medium complexity.

23. Can a guarantee/security be executed by way of e-signing?

Yes, but only in the limited cases where there are no form requirements (written form or notarisation). Written form requirements can only be fulfilled by using Swiss qualified electronic signatures pursuant to the Swiss Federal Act on Electronic Signatures. If a document requires notarisation, e-signing, whether by qualified electronic signature or note, is insufficient.

24. Are registers of guarantees/encumbrances over movable/immovable assets publicly available and accessible online?

Registers are only exceptionally available for movable assets in Switzerland. The land registers are available on proof of interest; in some cantons, they are accessible online.

25. Which party shall/can apply for registration of security in a relevant register?

Generally the security provider.

26. What documents need to be submitted and in what form for the guarantee/security registration with a relevant register?

a. Application for registrationYes (regarding real estate), original in full, in the local language.
b. Security/guarantee documentAs a rule, no regarding real estate.
c. Principal obligation agreementAs a rule, no regarding real estate.
d. Title documents to the collateralNo.
e. OtherN/A.

27. How much time and cost does it take to:

27.1 check if any encumbrances over collateral exist (i.e. obtain extracts)

27.2 register/deregister/amend/remove an encumbrance in a relevant register?

27.3 notarise (if required) a security document?

27.4 comply with other perfection requirements?

SECURITY ENFORCEMENT

28. The right to enforce security arises when:

28.1 the secured debt is unpaid and due?

Time: medium, depending on the register and its capacity.

Cost: low.

28.2 there is any other breach under the principal obligation agreement?

Time: medium.

Cost: Generally low. Regarding real estate, it depends on location and value.

28.3 there is any other breach of the pledge/security agreement?

Time: quick.

Cost: Generally low. Regarding real estate, it depends on location and value.

28.4 the debtor or guarantee/security provider becomes insolvent?

In certain cantons and municipalities, a stamp or similar tax or duty may apply on certain types of security agreements if these are signed, registered or produced in front of an administrative body in that canton.

28.5 any other grounds?

29. Is there any mandatory period for curing a default and/or any other formalities to be fulfilled before proceeding to enforcement?

No. 

30. Is out-of-court security enforcement available? Is any additional instrument for direct enforcement required?

Yes, by way of private enforcement proceedings instead of official debt enforcement proceedings.

31. Which out-of-court enforcement methods are available and how the collateral value is determined thereunder:

In private enforcement proceedings, a public auction, private sale or self-sale is possible, which must take place on prevailing market conditions.

31.1 taking over the title to the collateral?

Yes, in certain circumstances.

31.2 selling collateral to a third party by way of direct sale or private or public auction?

For official enforcement proceedings, a public auction can be carried out (private sale in certain circumstances).

Within private enforcement proceedings, a public auction, private sale or self-sale is possible.

31.3 notarial writ?

No. 

31.4 other?

Yes, they can be used but are not mandatory. A power of attorney is revocable at any time.

a. bank accounts;Yes, not mandatory.
b. receivables;Yes, not mandatory.
c. IP rights;Yes, not mandatory.
d. shares (either of a listed company or a private company);Yes, not mandatory.
e. rights in a company (other than shares);Yes, not mandatory.
f. Insurance rights;Yes, not mandatory.
g. Inventory;Yes, not mandatory.
h. Equipment/plant/machinery;Yes, not mandatory.
i. Goodwill;No.
j. Real estate property (other than land);Yes, not mandatory.
k. Land;Yes, not mandatory.
l. Objects under construction (object of unfinished construction).Yes, not mandatory.

33. Is there anything else of which a creditor should be aware as unusual or particularly difficult?

Pledges and a number of other security interests are accessory by nature.

Only a creditor can be a secured party of an accessory security and only up to the amount of its claims. It is, therefore, usual to use a “parallel debt” concept where a security agent acts on behalf of the secured parties.

34. Is security enforcement in practice: generally easy, fairly easy or complicated?–more debtor- or creditor-friendly or balanced? –quick, average or long in terms of timing?

Fairly easy, balanced, average in terms of timing.

35. Are there any upcoming changes to guarantee/security regulations/rules? 

No.