On March 4, 2025, the Senate passed the Bill on the Abolition of Pledge Prohibitions Act. This law will enter into force on July 1, 2025. Because of this law, it is no longer possible to agree that business receivables cannot be transferred or pledged. With this change, the government wants to make it easier for small and medium-sized businesses to attract credit. In this article, we explain what will change.
How is it regulated now?
Under current law, rights of action are in principle transferable or pledgeable, unless the law or the nature of the right precludes transfer.
For rights of claim, the parties to that claim can also agree together that a claim is not transferable or that no right of pledge can be established thereon. This can easily be done by including this in the money loan agreement, for example. Such provisions are often included. Debtors often do not want to face another creditor and this way it is clear to whom they must ultimately pay.
What will the new regulations be?
The law adds a provision stating that in the case of business claims, transferability or pledgeability can no longer be excluded. Such agreements are null and void from the entry into force of the law.
Agreements that attempt to limit the assignment or pledging of a claim are also void. For example, an agreement under which the creditor must seek the prior consent of his contracting party or pay a penalty if he does transfer the claim.
To protect debtors, the new regulations also stipulate that the notice to be given to the debtor when a claim is transferred or pledged must be in writing. This way, it is clear to the debtor to whom he must pay.
Exceptions
The new rules do not apply to monetary claims:
- by virtue of a checking or savings account;
- under a credit or money loan agreement involving multiple lenders;
- of clearing houses;
- paid into so-called G accounts.
These claims remain subject to the old regulation. It can therefore be agreed for these that they are not transferable or pledgeable.
Why is this regulation being introduced?
The purpose of the law is to broaden the credit possibilities for small and medium-sized companies. This can prevent unnecessary liquidity problems and free up resources for investments and innovation. This is because after the law comes into effect, companies will be able to use their receivables, the transferability or pledgeability of which was previously excluded, as security for financing. It is expected that this law will make it easier for companies to raise credit and will provide a significant credit margin.
Moreover, similar regulations already apply in Germany, Austria and the United Kingdom, among others. The law will level the playing field with these countries.
From when does this apply?
The Lifting of Pledge Prohibitions Act will enter into force on July 1, 2025. From that moment on, new agreements are immediately invalid. Existing agreements will remain valid for another three months. These will be void as of Oct. 1. This gives entrepreneurs three months to adjust existing agreements.
In conclusion
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