Collateral Account Control Agreement Template for Switzerland

A Collateral Account Control Agreement is a three-party legal document that establishes control arrangements over bank accounts used as collateral in secured financing transactions. Under Swiss law, this agreement ensures that security interests in account-based collateral are properly perfected and enforceable while maintaining clear operational procedures for all parties involved.

When do you need this document?

You need a Collateral Account Control Agreement whenever you're entering into secured financing arrangements where bank accounts serve as collateral. This includes commercial lending transactions where borrowers pledge cash accounts, structured finance deals involving collection accounts, syndicated loan arrangements with multiple lenders, and asset-based lending facilities. The agreement is also essential in acquisition financing, real estate development projects with escrow accounts, and any situation where lenders require direct control over cash flows or reserves held in specific accounts.

Key legal considerations

The agreement must clearly establish the control relationship between all three parties while protecting each party's legitimate interests. Critical clauses include the scope of control granted to the secured party, conditions under which the account holder retains access rights, and procedures for transitioning to exclusive lender control upon default or other trigger events. The document should address notification requirements, permitted withdrawals, interest allocation, and coordination with other security documents. Risk considerations include ensuring the agreement doesn't inadvertently create unauthorized banking relationships, properly addresses set-off rights, and includes adequate protections for the account bank against conflicting instructions or disputes between the primary parties.

Legal requirements in Switzerland

Swiss law requires compliance with the Federal Code of Obligations for the underlying contractual relationships, while the Banking Act governs the account bank's obligations and operational requirements. The Financial Market Infrastructure Act applies to securities custody arrangements and collateral handling procedures. For proper perfection of security interests, the agreement must satisfy requirements under Swiss pledge law, including adequate disclosure and control mechanisms. The Debt Enforcement and Bankruptcy Act governs enforcement procedures and priority rankings in insolvency situations. Additionally, if the collateral involves intermediated securities, the Federal Intermediated Securities Act provides specific rules for custody arrangements and transfer procedures. Banks must also comply with anti-money laundering regulations and know-your-customer requirements when establishing control arrangements.