The law of 11 July 2013 on security interests over moveable assets finally entered into force in Belgium on 1 January 2018. This law aims to facilitate the use by companies of their moveable assets to back up financing needs, thereby lowering the cost of financing.
In a nutshell, the key points to note are as follows:
- this new law only applies to moveable assets and excludes those falling within the scope of the Belgian law of 15 December 2004 on financial collateral;
- the existing system (i.e. with dispossession requirements) for pledges on moveable assets will continue to exist alongside the new one; and
- as explained below, actions will need to be undertaken for certain types of securities in order for the Pledgee to retain the ranking of the securities.
Pledge
The most important reform relates to the pledge over moveable assets which previously required dispossession of the pledged asset from the pledgor and which was often considered an impediment for the pledgor. Under the new law, enforceability towards third parties may now be effected through a (simple) registration of the pledge in an electronic pledge register which is publicly available for consultation and which will remain valid for a renewable period of 5 years. As stated above, the physical dispossession, however, remains an alternative to the electronic registration.
Additionally, a pledge on the business assets (handelszaak / fonds de commerce) will be easier and cheaper to create as (i) it will no longer be subject to a 0.50% registration fee over the secured amount, (ii) 100% of the inventory can be pledged (up from 50% previously), and (iii) the beneficiary of a business pledge can now be any creditor (and no longer only EU-licensed credit institutions).
Agent
Another novelty is the possibility for creditors to appoint an agent who will have the benefit of the pledge for and on behalf of the underlying creditors. Complex structures such as parallel debt or other mechanisms previously used to sidestep the uncertain status of security agent have thus become superfluous for most types of security interests under Belgian law.
Enforcement of the pledge
The enforcement of pledges will no longer require the intervention of a judge. Pledgors and pledgees will be able to agree the terms of enforcement, including the possibility to appropriate or sell the pledged assets. Lacking a contractual procedure, the pledgee will be entitled to appoint a bailiff to sell or rent out the pledged assets.
Transition period
Although security interests can now be vested under this new regime, it is important to note that existing business pledges will need to be registered in the electronic pledge register within a 12-month period after the entry into force of the new law to retain the ranking of the security.
