Introduction
In 2025, a highly anticipated piece of Dutch legislation is set to come into force: the Act on the Abolition of the Prohibition of Pledging (Wet Opheffing Verpandingsverboden). This law aims to address significant barriers in the financing landscape for businesses, particularly small and medium-sized enterprises (SMEs).
Current Legal Framework
Under current Dutch law, receivables (vorderingen) are generally transferable unless restricted by law or the nature of the receivable. However, parties can contractually exclude the transferability of receivables, including the creation of a pledge. Such exclusions are often found in agreements or general terms and conditions, preventing companies from pledging or assigning receivables. These provisions are designed to protect businesses from dealing with unknown creditors or pledgees.
Unfortunately, these restrictions hinder companies, particularly SMEs, from using their outstanding receivables as collateral for loans. This limitation affects their ability to secure financing and grow their operations. The proposed Act seeks to remove this obstacle, creating more opportunities for businesses to access credit.
Status of the Legislation
The proposal for the Act was adopted by the Dutch House of Representatives (Tweede Kamer) on 11 June 2024, and is currently under review by the Dutch Senate (Eerste Kamer). It is widely expected that the Dutch Senate will approve the proposal later this year without significant amendments, allowing it to be enacted into law.
Key Amendments
If the proposed Act becomes law, any contractual provision that excludes or limits the transferability or pledgability of monetary receivables arising from business transactions will be deemed null and void (nietig), either in whole or in part. However, there are four notable exceptions where such exclusions may still apply:
- receivables related to payment or savings accounts (betaal- of spaarrekeningen)
- receivables arising from syndicated loans involving multiple lenders
- receivables involving clearing institutions
- receivables related to specific tax and social security payments into G-accounts (G-rekeningen).
Additionally, the new law will introduce a requirement for creditors to send written notices of transfer or pledge to debtors. This ensures clarity for debtors regarding whom they must pay to settle their debts.
The nullification of restrictive provisions will take effect three months after the law’s enactment for existing agreements. For new agreements, the nullification will apply immediately upon the law’s entry into force. Both property law (goederenrechtelijke) and contractual law (contractuele) provisions will be covered.
Implications and Commentary
By adopting this legislation, the Netherlands aligns itself with neighbouring countries such as Belgium, Germany, and France, where similar restrictions have long been abolished. The removal of these barriers will significantly benefit the Dutch lending environment, particularly in the context of asset-based lending. Companies will have greater opportunities to use receivables as collateral, facilitating increased access to financing.
The law also addresses indirect prohibitions, such as clauses imposing penalties or conditions on the transfer or pledge of receivables. These will likewise be null and void, ensuring the proposed amendments’ effectiveness. However, negative pledge and pari passu clauses in loan and security documents remain unaffected, as they do not pertain to the debtor-creditor relationship between the security provider and its debtor-counterparties.
While the proposal has been broadly welcomed, some critics highlight unresolved issues such as the 'empty estate' (lege boedel) problem in bankruptcies, where fewer assets are available for unsecured creditors. Nevertheless, the increased access to credit may help prevent bankruptcies, mitigating this concern.
Conclusion
The Act on the Abolition of the Prohibition of Pledging represents a significant step forward for the Dutch financing landscape. By removing restrictions on the pledging of receivables, the legislation will empower businesses, particularly SMEs, to access the credit they need to thrive. Despite some criticisms, the anticipated benefits for the Dutch economy and lending climate far outweigh the concerns, marking a positive development for businesses and financial institutions alike.
Find out more
To discuss the issues raised in this article in more detail, please contact a member of our Banking and Finance team in Amsterdam.
