NL: Lifting of Pledge Prohibitions Act: new financing in sight?!

 

On 4 March 2025, the Senate adopted the 'Lifting of Pledge Prohibitions Act'. The law is expected to enter into force on 1 July 2025, although the exact date is not yet known. In this message, we briefly discuss the background of this law and the positive and possible negative consequences that this law has for you as an entrepreneur. In summary, the law may increase your financing options, but you could also be confronted with (undesirable) new creditors.

Why was the 'Lifting of Pledge Prohibitions' Act adopted?

Before this new law, Article 3:83 paragraph 2 of the Dutch Civil Code stipulated that parties in agreements can exclude the transferability of claims. Many agreements, often general terms and conditions, contain such a provision that excluded the transferability of the right of claim for the benefit of the creditor. As a result, a debtor could not transfer his claims against creditors and could not pledge them to the bank. This was particularly true in several sectors, but particularly in the construction and retail sectors. As a result, it was difficult or impossible for companies in that sector to raise financing, because they could not use their claims as collateral when raising financing. The legislator considered this an undesirable side effect.

What does the new 'Lifting of Pledge Prohibitions Act' regulate?

The core provision of the new law is the new Article 3:83 paragraph 3 of the Dutch Civil Code:
"Exclusion of transferability or pledge is not possible if it concerns a registered money claim arising from the exercise of a profession or business. A clause between creditor and debtor which is intended to exclude the transferability or pledgeability of such a pecuniary claim in whole or in part or to prevent its disposal or pledge shall be null and void.'"

In short, any clause intended to exclude the transferability of trade claims is null and void. This also applies to provisions that, for example, impose a penalty on the assignment of the claim. The article also only covers trade receivables, the transferability of claims on, for example, the bank itself on the basis of a payment account can still be excluded. Finally, the transfer or pledge of these trade receivables must take place in writing.

What does this mean for (SME) companies?

The new law may have the positive effect that you can obtain financing from the bank more easily and under better conditions using the claims as collateral. The sale of your receivables to (for example) a factoring company is also no longer restricted. This positive effect is expected to occur in particular in companies where (trade) receivables from third parties are a material part of the assets.

However, the law also has a possible disadvantage in the commercial relationships in which your company is the debtor. After all, your contracting party who has a claim against you also has the option of transferring or pledging that claim. You may therefore be confronted with a creditor other than the party with whom you have concluded a contract and with whom you have no further commercial relationship. It is then important to pay the debt to that new party, because if you 'pay' the debt to your contracting party, you have not paid your debt to the right party and the new creditor will keep a claim.

From when does this law apply?

As mentioned, the law is expected to enter into force on 1 July 2025. The law then immediately applies to agreements concluded after that date. For existing agreements, provisions restricting the transfer will no longer be valid three months after the entry into force of the new law. You should therefore be aware that after that period has expired, you may receive a written notification that a claim has been transferred to you, even if you had excluded transfer in the agreement. If you are confronted with such a message, we will be happy to look at it with you to assess whether the transfer of the claim meets the legal requirements.

 

For further information, please contact:

Jaap van der Steenhoven, Lawyer

Labré, Amsterdam

e: jaap.vandersteenhoven@labre.nl

t: +31 20 3052030

 

#WLNadvocate #Amsterdam #NL #TheNetherlands #law #legal #lawfirm #lawyer #article #corporatelaw #commerciallaw #business #entrepreneur