NL: Lifting of Pledge Prohibitions Act: new financing possibilities?!

 

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 update, 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 could exclude the transferability of receivables. Many agreements, often general terms and conditions, contained such a provision that excluded the transferability of receivables for the benefit of the debtor. As a result, a creditor could not transfer his receivables towards debtors and could not pledge them to the bank. These provisions were used in several sectors, but particularly in the construction and retail sectors. As a result, it was difficult or impossible for companies in these sectors to raise financing, because they could not use their receivables 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 trade receivable 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 receivable 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 receivables is null and void. This also applies to provisions that, for example, impose a penalty on the transfer of the claim. The article only covers trade receivables, which means that 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 receivables 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 towards 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 a third party, even if you had excluded the possibility of the transfer of claims in the agreement. If you are confronted with such a notification, 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:

Sjef Bartels, Partner 

Labré, Amsterdam

e: sjef.bartels@labre.nl

or

Carry Dullaart, Partner

Labré, Amsterdam

e: carry.dullaart@labre.nl

 

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