Securities Account Control Agreement Template for Switzerland

When you need to secure a loan or credit facility using securities held in a Swiss account, you'll require a Securities Account Control Agreement to establish legal control over those assets. This specialized agreement creates a three-way relationship between you as the account holder, your lender or secured party, and the Swiss securities intermediary holding your assets. Under Swiss law, particularly the Federal Act on Intermediated Securities (FISA), this agreement is essential for perfecting security interests in intermediated securities.

When do you need this document?

You'll need this agreement when pledging securities accounts as collateral for loans, credit facilities, or other financial obligations. It's commonly used in corporate financing arrangements where companies pledge their investment portfolios or trading accounts to secure bank loans or bonds. The agreement is also essential in syndicated lending transactions where multiple lenders require shared control over securities accounts. Private wealth management clients often use these agreements when using their investment accounts as collateral for margin lending or real estate financing. Additionally, you'll need this document when restructuring existing security arrangements involving Swiss-held securities or when establishing new custody relationships that require enhanced control mechanisms.

Key legal considerations

The agreement must clearly define the control rights of each party, particularly the secured party's ability to direct disposition of securities without further consent from the account holder. You should pay careful attention to trigger events that activate the secured party's control rights, such as payment defaults or covenant breaches. The document must specify procedures for handling dividends, interest payments, and other distributions from the securities, including whether these flow to you or are applied against your obligations. Consider including provisions for substitute collateral if specific securities need to be sold or transferred. The agreement should also address operational matters such as trading restrictions, reporting requirements, and the process for releasing control when your obligations are satisfied.

Legal requirements in Switzerland

Under Swiss law, the agreement must comply with FISA requirements for establishing control over intermediated securities, which typically requires the securities intermediary's acknowledgment of the secured party's control rights. The document must align with Swiss Federal Code of Obligations provisions governing contractual relationships and security interests. Banking Act compliance is crucial when the securities intermediary is a Swiss bank, requiring adherence to banking regulations and customer protection rules. The agreement should incorporate Financial Market Infrastructure Act (FMIA) provisions relevant to securities settlement and custody arrangements. Additionally, you must consider Swiss debt collection and bankruptcy law implications, ensuring the security interest remains enforceable in insolvency proceedings and complies with ranking rules for competing claims against the same securities account.