Legislative proposal close to becoming law

On Tuesday 11 June 2024 the Dutch House of Representatives unexpectedly adopted the legislative proposal for a ban on transfer and pledge restrictions (Wetsvoorstel opheffing verpandingsverboden) from 29 May 2020 (the Proposal).

It is anticipated that later this year, the Dutch Senate will adopt the Proposal without material amendments, following which it will be enacted into law.

An overview of the legislative process can be found here.

Ban on contractual transfer and pledge restrictions with respect to Trade Receivables

In summary, the Proposal provides for a ban on contractual transfer and pledge restrictions (the Ban) with respect to receivables which arise in the exercise of a profession or a business (Trade Receivables). Pursuant to the Proposal, any contractual provision which would restrict the transfer of or the creation of a right of pledge over a Trade Receivable would be null and void.

Exceptions to the Ban

The Proposal provides for an exception for contractual transfer and pledge restrictions with respect to receivables which:

• arise out of a payment or savings account;
• arise out of a loan or credit agreement with two or more lenders;
• are owed to a clearing institution or a central counterparty, a settlement agency, a clearing house or a central bank as referred to in Section 212a of the Dutch Bankruptcy Act; or
• are paid into a bank account which is held for the sole purpose of payment of payroll taxes, sales taxes or social insurance premia.

Accordingly, contractual transfer and pledge restrictions with respect to these types of receivables will not be affected by the Ban.

Key take-aways

The key take-aways for the banking & finance practice are:

1. Contractual transfer and pledge restrictions with respect to Dutch law governed Trade Receivables will no longer be effective; no due diligence will be required with respect to the ability of Dutch law governed Trade Receivables to be transferred or pledged.
2. Contractual transfer and pledge restrictions with respect to Dutch bank account receivables will not be affected by the Ban; in practice, the creation of a right of pledge over a Dutch bank account will continue to require consent from the account bank.