On 4 March 2025, the Act on the abolition of pledge restrictions ( Wet opheffing verpandingsverboden) was adopted by the Dutch Senate. This law puts an end to contractual provisions in commercial transactions that restrict the transferability and pledgeability of monetary claims. The legislative amendment is particularly relevant for financing practices, especially within SMEs. The law aims to provide companies with more credit capacity and improve finance possibilities.
Background
As a general rule, claims are freely transferable unless restricted by law or the nature of the right itself. Under current law, the transfer or pledge of claims can be contractually excluded. This possibility is widely utilised in certain sectors, such as construction and retail, primarily due to debtors' preference to avoid being confronted with new creditors and payment addresses.
However, reports from the business community indicate that the large-scale exclusion of transferability and pledgeability has led to economically undesirable side effects. In practice, the result is that claims and credit portfolios are no longer used as collateral for lending. This adverse economic effect is further strengthened by the fact that surrounding countries, such as Germany, Austria, and the United Kingdom, have already restricted or abolished the enforceability of contractual non-assignment and non-pledge clauses. This results in a distortion of the level playing field, disadvantaging Dutch businesses.
Changes regarding monetary claims
Under the new legislation, the ability to exclude the transfer or pledge of claims remains in place. However, this will no longer apply to monetary claims which result from the conduct of business or profession. This includes business-related monetary claims between enterprises, regardless of whether they arise in a business-to-business (B2B) or business-to-consumer (B2C) context. Any clause that excludes the transfer or pledge of such claims will be void.
Furthermore, clauses that do not explicitly prohibit transfer or pledge but seek to hinder these rights will also be deemed void under the new legislation. This includes penalty clauses or provisions imposing conditions on transfer or pledge.
The new law only affects provisions agreed between a creditor and a debtor. Negative pledge and pari passu clauses remain valid.
Exceptions
The current regime will remain in force for four specific types of claims, meaning that transfer or pledge may still be contractually excluded when it concerns claims:
- resulting from a bank account;
- resulting from a credit agreement whereby multiple parties act or will be acting on the lender side (syndicated loans);
- held against or held by clearing institutions as referred to in the Dutch Act on Financial Supervision (Wet op het financieel toezicht);
- relating to payment of certain taxes (i.e. labour tax, VAT and social security premia) on a bank account held for the purpose of payment of such taxes.
Written notification requirement
The legislator has taken into account debtors' interest in knowing to whom they can validly discharge their payment obligations following a transfer or pledge. When a monetary claim which results from the conduct of business or profession is transferred or pledged, the debtor must be notified in writing of the transfer or pledge. Until this written notification has been made, the debtor may continue to discharge their payment obligations to the original creditor. This notification requirement does not apply to the exceptions listed under the new law.
Practical implications
The law will also apply to existing agreements three months after its entry into force (the exact date is yet to be determined). This means that, from that moment, even claims that previously could not be pledged due to a contractual restriction will become pledgeable.
Below are some practical recommendations for businesses in light of this new legislation:
- A security right will not automatically arise on monetary claims that were previously unpledgeable, even if a general security right over claims was already granted. Therefore, after the law enters into force, ensure an (additional) pledge is established to bring these claims under an existing security right, if desired.
- Anticipate the upcoming legislation by removing non-assignment and non-pledge clauses from model agreements and new contracts.
- Consider using monetary claims more frequently as collateral for financing.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
