Add to My interests
23 Jun '20
After the legislative proposal for the Act on prohibition of restrictions on transferability and pledgeability of receivables (Wetsvoorstel ophefffing verpandingsverboden (the Bill)) was published for consultation in 2018, there was a long period of silence. This silence ended on 29 May 2020 with the submission of the Bill to the Dutch Parliament. The consultation of the Bill has led to a number of amendments. We will elaborate on some of the most important amendments hereafter. Freedom of contract is one of the cornerstones of our society and our economy. These are some of the first words of the explanatory memorandum (memorie van toelichting) to the Bill (the Explanatory Memorandum). The legislator is of the opinion that the concept of freedom of contract has an undesirable effect if it comes to imposing restrictions on transferability and pledgeability of receivables on a party In the Netherlands it is common practice that parties include provisions in agreements (or terms and conditions that apply thereto) that restrict or prohibit the transfer or pledge of receivables by contract based on article 3:83 paragraph 2 in conjunction with article 3:98 of the Dutch Civil Code (Burgerlijk Wetboek (DCC)). As a result, the related receivables and loan portfolios cannot be used as credit coverage, which leads to a limitation of credit capacity of creditors. The introduction of the Bill leads to:
Overall the Bill is good news for the Asset Based Finance, Commercial Finance and Factoring sector.
The consultation has led to a number of important amendments to the Bill. For example, the criterion, that the transfer or pledging must take place for financing purposes, has been abandoned. It would be too complex and cumbersome for parties to establish this time and time again. In addition, it has been clarified that claims on or from a central counterparty, a settlement agency, a clearing house or a central bank do not fall within the scope of the Bill. The Bill also aims to include in article 3:83 paragraph 4 DCC that claims under a credit or loan agreement (potentially) involving multiple lenders are excluded from the Bill. In this way, the aim is not to include so-called syndicated loan arrangements within the scope of the Bill. Claims that are paid into a so-called G account, specific account for the collection of moneys to be paid for e.g. social security taxes, are also not affected by the Bill. Furthermore, it has been further clarified that so-called negative pledge and pari passu provisions will also continue to apply in the future and that existing financing practice will not be affected in that respect.
With the Bill, the legislator aims to prohibit or restrict contractual provisions that exclude or restrict the transferability and pledgeability of receivables. Only receivables that have arisen in the course of a profession or business fall within the scope of the Bill. Claims of private individuals who do not act in the course of a profession or business are explicitly excluded. The Bill is expected to have a positive economic effect, at least, because it could lead to an additional credit facility of EUR 1 billion, which could benefit SMEs in particular, for example through new or more factoring and asset based finance options.
The Bill, if passed, will lead to the following changes in Book 3 DCC.
The Bill contains a proposal for a transitional period of three months after entry into force. This means that with regard to existing agreements from three months after the entry into force of the Bill, provisions that limit or exclude the transfer or pledging of commercial monetary claims are null and void. For contracts entered into after the Bill has entered into force, the Bill has immediate effect. It is important for market parties to verify whether (standard) agreements and general terms and conditions that are currently being used contain provisions that are contrary to the Bill and what the consequences and impact thereof may be. It is advisable to amend standard documentation by removing provisions that conflict with the Bill. In view of the importance, the Bill is expected to be adopted rather quickly. Ploum's Banking & Finance team will regularly provide updates on the status of the Bill. For questions and further information, please contact Matthijs Bolkenstein (email@example.com or +31 6 46630866) or Lucas Lustermans (firstname.lastname@example.org or +31 6 19850096).
Would you like to respond on this article? Login or create a My Ploum account to post your comment
05 Jan '21
08 Dec '20
19 Nov '20
12 Nov '20
29 Oct '20
27 Oct '20
05 Oct '20
01 Oct '20
29 Sep '20
24 Sep '20
01 Sep '20
05 Aug '20
Stay up to date with the latest legal developments in your sector. Fill in your personal details below to receive invitations to events and legal updates that matches your interest.
For more information on how we use your personal information, please see our Privacy statement. You can change your preferences at any time via the 'Change your details' link or unsubscribe via the 'Unsubscribe' link. You will find these links at the bottom of every message you receive from Ploum.
Get all your tailored information with a My Ploum account. Arranged within a minute.
*This field is required
Follow what you find interesting
Receive recommendations based on your interests
Quick registration for knowledge events and Ploum Academy
Post comments on articles
We ask for your first and last name so we can use them when you register for a Ploum event of Ploum academy.
A password will automatically be created for you. As soon as your account has been created you will receive this password in a welcome e-mail. You can use it to log in immediately. If you wish, you can also change this password yourself via the password forgotten function.