Overview of the Swiss Legal Framework

As soon as ACRON has identified a property that meets all of the criteria for a successful ACRON investment, an "ACRON HELVETIA [name of property] Immobilien AG” is founded. This company, which is structured as a property-specific stock corporation under Swiss law, then acquires the real estate selected. The sole purpose of the company is owning and holding the property acquired. There is no provision for acquiring additional real estate or engaging in other business activities.

The Stock Corporation as an Investment Shell

The stock corporation serves as a shell for the investment. With regard to stock corporations, investor liability is always excluded. All legal obligations are incurred by the company, which is liable to the extent of its paid-in share capital.

The property and the additional acquisition expenses are financed through a combination of equity and borrowed funds. Investors contribute their equity in the amount subscribed and in turn receive the subscribed number of shares. Funds to finance the remainder of the property acquisition are borrowed from a bank. By subscribing the shares and paying the subscription amount, investors become shareholders of the company and are thereby granted all shareholder rights. Following full placement, the shares are posted to and are available to investors in their personal securities accounts.

Investor Protection (Escrow Account)

A bank or an auditing firm is engaged and entrusted with guaranteeing the appropriate use of the subscription funds for the special protection of investors. The primary duty of the bank or auditing firm is to monitor that the subscription amounts paid-in by the investors are not transferred to the company until the investors have acquired ownership of the shares.

Annual Distribution to Shareholders

The company's distributions take place once a year and are made up of a (taxable) dividend and the reduction in the shares' par value, which is always tax-free at shareholder level. In a par value reduction (also called a capital reduction), the nominal value of each share of the company is reduced with the difference being distributed to the shareholders. From a financial perspective, the assets of the shareholders, i.e., their interest in the company, are unaffected by this process. Par value reductions are a common process in Switzerland and are extremely popular, not least due to the accompanying tax advantages. The liquidity required for the distributions is generated by the rental income from the property.

Termination of an Entire Investment

The shareholders may chose to terminate an investment entirely. Fundamentally, there are two ways to dissolve an investment: first, by selling the property and subsequently liquidating the investment company, and second, by selling all of the shares of the company. The question of which of these two options to take will be discussed and decided in agreement with the investors at the relevant point in time.