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A Control Agreement lets a lender take control of a borrower's bank accounts in Austria, typically as part of a larger security arrangement. It creates a three-way relationship between the lender, borrower, and the bank holding the accounts, giving the lender certain rights to monitor and restrict account activity.

Under Austrian banking law, these agreements play a crucial role in secured financing by letting lenders protect their interests without physically holding the funds. The bank agrees to follow the lender's instructions about account transactions and won't allow withdrawals or transfers without approval. This setup is common in corporate lending and project finance deals where lenders need strong security over cash assets.

Consider implementing a Control Agreement when lending significant sums to Austrian businesses and need secure control over their bank accounts. This arrangement becomes essential in project financing, where the borrower's cash flow serves as vital collateral, or in restructuring scenarios where close monitoring of financial movements is crucial.

The agreement proves particularly valuable when dealing with multiple banking relationships or when operating in industries with strict regulatory oversight. Austrian banks readily accommodate these arrangements, especially for larger corporate loans where the lender needs immediate access to account information and the ability to freeze funds if the borrower defaults or violates loan terms.

• Basic Account Control: The standard Austrian Control Agreement focuses on single account oversight, typically used for straightforward corporate loans where monitoring cash movements is the primary concern.
• Multi-Account Framework: Covers multiple accounts across different Austrian banks, essential for complex corporate structures or project financing.
• Springing Control: Remains dormant until triggered by specific events like payment defaults or covenant breaches, common in Austrian restructuring scenarios.
• Full Blocking Control: Provides immediate and complete lender control over all account transactions, used in high-risk lending situations.

• Lenders: Usually banks or financial institutions who initiate the Control Agreement to secure their interests in corporate lending situations.
• Account Banks: Austrian banks holding the borrower's accounts who must comply with the agreement's terms and the lender's instructions.
• Borrowers: Corporate entities who agree to restricted access to their bank accounts in exchange for financing.
• Legal Counsel: Austrian banking lawyers who draft and negotiate the agreements, ensuring compliance with local banking regulations.
• Bank Officers: Staff responsible for implementing account restrictions and monitoring compliance with agreement terms.

• Account Details: Gather complete information about all bank accounts to be controlled, including account numbers and banking relationships.
• Party Information: Collect legal names, registration numbers, and authorized signatories of the lender, borrower, and account bank.
• Security Parameters: Define specific control rights, notification requirements, and permitted transactions under Austrian banking regulations.
• Bank Procedures: Confirm the account bank's operational requirements for implementing account restrictions.
• Documentation Review: Use our platform to generate a compliant Control Agreement template, ensuring all mandatory elements align with Austrian legal requirements.

• Party Identification: Full legal names and addresses of lender, borrower, and account bank under Austrian law.
• Account Details: Precise identification of controlled accounts and permitted transaction types.
• Control Mechanics: Clear procedures for implementing account restrictions and processing instructions.
• Notice Requirements: Specific timing and methods for communications between parties.
• Bank's Obligations: Detailed responsibilities regarding account access and instruction compliance.
• Termination Rights: Conditions and procedures for ending the agreement.
• Governing Law: Express submission to Austrian jurisdiction and applicable banking regulations.

A Control Agreement differs significantly from a Custody Agreement, though both deal with financial asset management in Austria. While Control Agreements focus specifically on bank account access and transaction control in lending situations, Custody Agreements have a broader scope in managing various types of assets.

• Asset Coverage: Control Agreements only govern bank accounts, while Custody Agreements can cover securities, precious metals, and other financial instruments.
• Primary Purpose: Control Agreements serve as security mechanisms in lending, whereas Custody Agreements focus on safekeeping and administration of assets.
• Party Relationships: Control Agreements involve a three-way relationship between lender, borrower, and bank. Custody Agreements typically involve just the custodian and asset owner.
• Operational Control: Control Agreements give lenders direct transaction approval rights, while Custody Agreements primarily establish asset protection and management duties.