Abolition of Pledging Prohibitions Act in Full Force as of 1 October 2025

On 1 July 2025, the Act on the Abolition of Pledging Prohibitions (Wet opheffing verpandingsverboden) entered into force. This Act, by which Book 3 of the Dutch Civil Code (“DCC”) is amended, puts an end to contractual clauses that exclude the transfer or pledging of business receivables. As of 1 October 2025, this will also apply to clauses included in existing contracts. The legislator hereby intends to expand the credit potential for enterprises, particularly for SMEs.[1]

In practice, many commercial contracts contain clauses that exclude the transfer or pledging of receivables. Until the Act on the Abolition of Pledging Prohibitions took effect, Section 3:83 (2) DCC allowed parties to agree to make a receivable non-transferable or non-pledgeable. This option was used on a large scale. Entrepreneurs with a central administration wanted to avoid being confronted with a different party than their original contractual partner, such as a bank or an insurer, after transferring a receivable or foreclosing on a pledge. They therefore set great store by an unequivocal payment address with one fixed creditor, without uncertainty as to who was entitled to the payment.[2]

While understandable from the perspective of debtors, this practice created an undesirable side-effect. Receivables could not be used as security for the performance of payment obligations under a credit facility. Enterprises were in fact restricted in their credit margin, so that they could attract less funding and operate less flexibly. 

The new act intends to remedy this by ensuring that entrepreneurs can freely use their claims as security, e.g. for securitisation, factoring, or obtaining funding.

To this end, the legislator has introduced a new subsection 3 in Section 3:83 DCC. This section provides that a receivable arising from the conduct of a profession or business must always be transferable and pledgeable. A contractual clause that prevents this, in whole or in part, is null and void from now on. This means that such clauses have no legal effect anymore and that entrepreneurs can freely use their business receivables as security for financing. 

The act prohibits both property-law and contract-law clauses that restrict the transfer or pledging of business receivables. Indirect impediments for transfer or pledging, such as penalty clauses or early recovery of a pledged loan, termination rights of a pledged loan, or confidentiality clauses that obstruct pledgings indirectly, are not allowed either.

The act does not apply to arrangements made between the creditor and a third party, such as a financier. An example of this is the negative pledge clause (in which the creditor undertakes to the financier not to provide any securities to other creditors). Because these arrangements do not concern the transferability or pledgeability of an actual receivable, but the relationship between the creditor and its financier, they are beyond the scope of this act and remain valid.

To protect the position of debtors, the law introduces a written form requirement. 

The new Section 3:94 subsection 3 DCC and Section 3:239 subsection 5 DCC require that a debtor be notified in writing of the transfer or pledging of his creditor's receivable. Previously, such notification had no prescribed form and could also be made orally, for example. Without this written notification, payment by the debtor to the original creditor will clear the debt, as before. This requirement applies only to business receivables.

Starting from 1 October 2025, the pledging prohibitions agreed in contracts dating from before 1 July 2025 are also null and void. This short term was chosen deliberately to give SMEs access quickly to extra credit margin, which is expected to be released by the new act, and of which the size is estimated at almost 1 billion Euro.[3]

A nationwide shoe store chain supplies products to franchisees on account. The contracts provide that the receivables cannot be pledged. Until recently, this chain could therefore not use these receivables as security for its payment obligations under the credit facility at the bank. This will change when the Abolition of Pledging Prohibitions Act takes effect. As of 1 October 2025, such a prohibition is null and void (Section 3:83 subsection 3 DCC), provided that it concerns business receivables. By pledging these receivables and notifying the franchisees, as debtors, in writing (Section 3:239 subsection 5 DCC), the store chain increases its credit margin. This offers financial room, for example to source more broadly for the new season.

The act contains a few dedicated exceptions listed in Section 3:83 subsection 4 DCC:

• receivables under payment and savings accounts;
• syndicated loans;
• receivables from clearing institutions, central counterparties and central banks; and
• blocked accounts for the payment of taxes and contributions.

These exceptions are meant not to disrupt payment traffic and existing administrative practices.

The act offers entrepreneurs more flexibility and greater access to financing. Receivables can be pledged without contractual impediments. However, entrepreneurs will have to review their contracts and ensure that the administrative handling of notifications to debtors is correct.

This act opens new opportunities to entrepreneurs previously impeded by contractual clauses. It is advisable to examine existing contracts for prohibitions and to adjust internal processes, where necessary, to the requirement of written form.

The Abolition of Pledging Prohibitions Act is a drastic, but necessary modernisation of property law. It strengthens the position of entrepreneurs in commerce and widens their access to credit. At the same time, legal certainty for debtors remains guaranteed. The time has come for entrepreneurs to align their contracting practice and financing strategies to this change. 

Would you like to know what this act means concretely for your business? Please contact us. We will be happy to help you review contracts and set up a future-resistance financing structure.

[1]Parliamentary Papers II 2019/20, 35482, nr. 4, p. 1 (Explanatory Memorandum). 

[2]Parliamentary Papers II 2019/20, 35482, nr. 4, p. 1-2 (Explanatory Memorandum).

[3] Parliamentary Papers II 2019/20, 35482, nr. 4, p. 2 (Explanatory Memorandum).