On 1 July 2025, the Act on the Abolition of Pledge Prohibitions will enter into force. Under current law, it is still possible to contractually exclude the assignment or pledging of a receivable. This will be prohibited under the new legislation. The aim of the Act is to make it easier for businesses to obtain external financing by removing restrictions on the use of receivables as collateral.
A pledge prohibition is regularly included in contracts in practice. In short, a pledge prohibition means that the creditor is not allowed to transfer or pledge their receivable to a third party, typically a financier.
In a situation without a pledge prohibition, the financier would be more likely to provide credit, as receivables can be used as collateral or transferred. If the financier is not repaid on time, they can recover their losses from the pledged receivables. The idea is that more certainty leads to quicker access to financing.
With the introduction of the Act on the Abolition of Pledge Prohibitions, a significant legislative change is being implemented. In principle, it will become legally prohibited to include a pledge prohibition in a contract. Clauses that exclude or restrict the transfer or pledging of receivables will, in many cases, no longer be legally valid against third parties. This means that a financier to whom receivables have been pledged cannot be confronted with a contractual prohibition.
As a result, creditors will generally be able to freely transfer or pledge their receivables under the new law, even if the contract states otherwise. With this, the Dutch legislator aligns with legislation in neighboring countries such as Germany and the United Kingdom, where pledge prohibitions are no longer permitted. This only applies to agreements entered into after 1 July 2025. Pledge prohibitions in contracts concluded before this date are not covered by the new law and remain valid.
In some situations, a pledge prohibition will still be effective. For example, receivables arising from payment or savings accounts with a bank are excluded from the prohibition. Pledge prohibitions in general banking terms and conditions therefore remain valid.
The new law is expected to create more room for obtaining financing—particularly within the SME segment, but also for other companies where receivables may be the only form of collateral available. On the other hand, entrepreneurs will no longer be able to rely on a pledge prohibition. They may suddenly be confronted with a different creditor than the one with whom they originally entered into an agreement, because the receivable has been sold or pledged.
Do you have questions about the pledging of receivables? Please contact Sacha Krekel, Partner & Attorney at law Corporote Law.
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