
2 April 2025
The Dutch Senate has passed the Abolition of Pledge Prohibitions Act (Wet opheffing verpandingsverboden). Set to enter into force on 1 July 2025, the Act aims to expand the financing options for companies, especially small and medium-sized enterprises.
In essence, the Act invalidates contractual transfer and pledge prohibitions and restrictions ("non-transferability clauses") in respect of professional and commercial money claims. This will enable entrepreneurs to use those claims as collateral for loans or factoring.
The definition of 'professional or commercial money claims' ("trade receivables") is broad in scope. It is not limited to entrepreneurs' claims against other entrepreneurs or private individuals for products or services provided, but also covers claims arising from contracts between entrepreneurs and others in general. For example, a claim under a real estate or share purchase agreement also qualifies as a trade receivable.
The Act introduces a number of key changes and includes specific exceptions.
Key changes
The key changes are as follows:
- Nullity of non-transferability clauses: arrangements between a creditor and debtor excluding or restricting the transfer or pledge of trade receivables will be null and void. Please note that this does not extend to contract takeovers, which will continue to be governed by the current rules (meaning that contract takeovers can only be effected with the other party's cooperation). It is irrelevant whether the non-transferability clause applies under property law or the law of obligations. Whether a non-transferability clause can also be partly null and void is unclear. 'Negative pledge' and 'pari passu' clauses between a debtor and a third party will continue to be permitted, as these are not arrangements between a creditor and a debtor of trade receivables.
- Written-notification requirement: if a transfer or pledge of trade receivables requires that notification be given to the debtor, this notification will have to be provided in writing.
- Transitional regime: a transitional period of three months from entry into force will apply to existing non-transferability clauses. After those three months, existing non-transferability clauses will also be null and void.
Exceptions
Certain trade receivables are excluded from the Abolition of Pledge Prohibitions Act:
- Bank accounts: claims under current or savings accounts.
- Syndicated loans: claims under loan agreements with several lenders. Loan agreements with a single lender that, according to their wording, allow several lenders to accede to the agreement at a later date will presumably also be governed by this exception.
- G accounts: claims under certain blocked accounts used for tax or contribution payments.
- Clearing claims: claims of or against clearing institutions, central banks, central counterparties, resolution institutions or clearing houses.
Practical implications
The Abolition of Pledge Prohibitions Act will open up new possibilities for companies and financiers, but will also entail limitations:
New possibilities
- Expansion of financing options: it will be easier to transfer trade receivables or to use them as collateral. Companies can transfer trade receivables via factoring or pledge them to a bank, even if existing arrangements exclude this option.
- Efficiency for financiers: lenders will not need to do as much research into the transferability or pledgeability of claims. If the claims in question are trade receivables, they can be transferred or pledged. This will reduce the risks for lenders and may give rise to more favourable lending conditions for borrowers.
Limitations
- Loss of contractual freedom: it will be impossible to exclude the transfer or pledge of trade receivables. Thus, for example, borrowers will no longer be able to agree with their financiers that the latter's claims against them are not, or are to only a limited degree, transferable or pledgeable (except as regards a syndicated loan, in which case this will still be permitted).
- Administrative burden: if a company is notified that it must pay a particular claim to another party, the entrepreneur will have to verify the accuracy of this notification and keep proper records of it. Previously, companies that used non-transferability clauses could ignore these notifications because of the non-transferability clauses they had agreed with their creditors.
Practical examples
Here are some specific situations to illustrate the above:
- Wholesale: a supplier supplies goods to a wholesaler. They have agreed a non-transferability clause. After entry into force, the supplier can nevertheless pledge its claim to a bank or transfer it for factoring, freeing up capital for new stocks faster.
- Bilateral loan agreement: a borrower does not want the financier to transfer its claims against the borrower under a bilateral loan agreement to a third party (for example, to a 'loan shark'). After entry into force, the borrower can no longer make this arrangement with the financier. The same applies to existing arrangements on this point after the transitional period has ended.
Recommended actions
In view of the upcoming entry into force (probably 1 July 2025) and the end of the transitional period (probably 1 October 2025), preparation is advisable. Consider taking the following steps:
- Analysis of agreements: take stock of your current contracts and identify which claims will become transferable or pledgeable, both on the creditor and debtor side.
- Administrative adjustments: to the extent that this is not already the standard approach: implement a system to efficiently process and register written notifications of transfers or pledges, to ensure that no payments are made to the wrong party.
- Financing strategy: explore how you can use trade receivables for additional credit. Discuss the potential options with your bank or a financial adviser.
Please do not hesitate to contact Jeroen Vossenberg, Wouter Ekkelkamp, or Derk von Saher if you would like more information on the Abolition of Pledge Prohibitions Act.