The new Belgian act on security interests on movable assets has been adopted (“the Act”)1 . It introduces a fundamental modification of the Belgian pledge regime. Initially set for 1 January 2014, the Act will finally enter into force on 1 January 2018, as provided by the Royal Decree of 14 September 2017 2 .
The key feature of the Act consists in the fact that it deeply modifies the Belgian pledge regime by establishing, in addition to the traditional possessory pledge, a non-possessory pledge on movable assets.
The new legislation intends to modernize the rules applicable to the pledges, aims at improving consistency and introduces a uniform regime on the matter. As undertakings will now be allowed to carry out their professional activities while keeping their professional movable assets and being able to grant a pledge over them in order to secure financing, the Act is expected to boost inventory financing, borrowing and lending and other forms of asset financing.
Under the current regime, security on movable assets can only be created either by way of a possessory pledge (gage / pand), or a non-possessory pledge on a commercial business, which may only be granted to EU authorized credit institutions or financial institutions (gage sur fonds de commerce / pand op de handelszaak). As regards the pledge on movable assets, it shall be possessory: the creation and perfection of such a pledge require the dispossession of the pledged assets and that the debtor delivers the possession of these assets to the secured creditor or a third party pledgee.
As from 1 January 2018, although the possessory pledge on movable assets will remain in place, the delivery requirement to create and perfect a valid pledge will no longer apply if parties opt for non-possessory pledge on movable assets. The pledge may have a fixed term or an indefinite duration.
From an in rem agreement, the pledge has become a consensual agreement. However, the Act requires the non-possessory pledge to be proven by way of a written agreement which shall include a precise description of: (i) the assets given as a pledge; (ii) the secured liabilities; and, (iii) the maximum amount secured. Furthermore, this pledge will be enforceable against any third party as from the registration of the corresponding agreement in a new central public register, the National Register of Pledges (Registre national des gages / Nationaal Pandregister). The registration will remain valid for a (renewable) term of 10 years, including the pledge of indefinite duration.
With regard to the pledge on a commercial business, the existing legislation3 will be abolished by the Act. The benefit of this pledge will no longer be limited to EU authorized credit institutions or financial institutions. In addition, the limitation that only 50% of the stock’s value of the commercial business may be covered by the pledge will be repealed. Existing pledges on a commercial business, which are recorded in the mortgage register under the existing regime, will only keep their ranking if they are newly registered in the National Register of Pledges within a period of 12 months (i.e., before 31 December 2018).
In the case of multiple pledgees, priority will be determined according to the prior tempore rule (i.e., the anteriority rule). The ranking is determined by the date of registration. Where possessory pledge has also taken place, the dispossession will prevail.
Furthermore, the Act recognizes “super priority rights” of sellers who benefit from a reservation of title clause. The latter will rank above all other pledgees, despite there being no publicity of the reservation of title. The same applies for creditors who rely on a right of retention, for the costs they may incur to preserve the assets in question.
In the event of a payment default, the pledgee will be allowed to immediately enforce the pledge, without prior court approval4, without prejudice of a required prior notification to the debtor and the other pledgees. Moreover, if so provided in the pledge agreement, the pledgee will also be entitled to appropriate the pledged assets, rather than selling them (to the extent that the pledge agreement also provides that the value of the pledged assets will be determined by an expert on the day of the appropriation, or at the market price when the assets are traded on a market). In the absence of an appropriation clause, the pledgor can still validly consent to appropriation, if such consent is given after the pledgor’s default of payment.
The National Register of Pledges will be an online register, available to anyone who pays the required fee and is able to identify itself. Users of the register must identify via their electronic Belgian ID-card. Persons who do not hold a Belgian ID-card can access via a Belgium-based agent (e.g. a notary or a law firm).
The registration fee will be capped to EUR 500 depending of the maximum amount of the secured liabilities (with a minimum of EUR 20). Amendments to registration will be capped to EUR 300 and its removal in full limited to EUR 200. The fee for the consultation of the register is set at EUR 5, while its access remains free for the pledgor and the pledgee.
1 Loi du 24 juin 2013 réglant des matières visées à l’article 77 de la Constitution en matière de sûretés réelles mobilières et Loi du 11 juillet 2013 modifiant le Code Civil en ce qui concerne les sûretés réelles mobilières et abrogeant diverses dispositions en cette matière / Wet van 24 juni 2013 tot regeling van aangelegenheden als bedoeld in artikel 77 van de Grondwet inzake de zakelijke zekerheden op roerende goederen en Wet van 11 juli 2013 tot wijziging van het Burgerlijk Wetboek wat de zakelijke zekerheden op roerende goederen betreft en tot opheffing van diverse bepalingen ter zake.
2 Arrêté royal du 14 septembre 2017 portant exécution des articles du titre XVII du livre III du Code civil, concernant l’utilisation du Registre national des gages / Koninklijk besluit van 14 september 2017 tot uitvoering van de artikelen van titel XVII van boek III van het Burgerlijk Wetboek, die het gebruik van het Nationaal Pandregister betreffen.
3 Loi du 25 octobre 1919 sur la mise en gage du fonds de commerce, l’escompte et le gage de la facture, ainsi que l’agréation et l’expertise des fournitures faites directement à la consommation / Wet van 25 oktober 1919 betreffende het in pand geven van de handelszaak, het disconto en het in pand geven van de factuur, alsmede de aanvaarding en de keuring van de rechtstreeks voor het verbruik gedane leveringen.
4 Except where the pledgor is a consumer, in which case a court decision is necessary.