Dutch businesses and financiers must act ahead of receivables legislative revamp

The Act on the Abolishment of Transfer and Pledge Restrictions (3 pages/45 KB PDF) is a legislative pivot in Dutch commercial law. By prioritising economic utility over contractual autonomy, the Dutch legislature has opened the door to more dynamic and accessible financing structures.

The Act addresses a longstanding habit in Dutch commercial practice: the widespread use of contractual clauses that prohibit or restrict the transfer or pledge of receivables – amounts owed, but not yet paid. These clauses, while rooted in the principle of contractual autonomy, have historically limited the ability of businesses to leverage receivables as collateral in financing agreements.

The new law amends section 3:83 of the Dutch Civil Code (DCC), rendering such restrictions on receivables arising from professional or business activities null and void, barring some exceptions. This reform aims to significantly expand the pool of assets available to attract financing, for example through securitisation and factoring, and so improve the overall competitiveness of Dutch enterprises internationally.

Important legal changes

Previously, parties under Dutch law were free to agree to restrict the transfer or pledge of any receivables. Debtors often preferred this, as it meant they could ensure the identity of their creditor and make payments to the right addressee. However, this impeded the ability of Dutch businesses - and in particular small and medium sized enterprises - to attract new financing, leading the Dutch legislator to reassess the current framework and, ultimately, loosen the restrictions.

The Act introduces two new paragraphs – paragraphs 3 and 4 – to section 3:83 of the DCC changing the rules on this. Paragraph 3 includes a general prohibition on contractual exclusions of transferability or pledge, meaning that any clause between a creditor and debtor that restricts or prohibits the transfer or pledge of a business-related receivable will be null and void. Paragraph 4 of section 3:83 DCC sets out exceptions from this new general prohibition.

The amendments apply only to monetary claims arising from the exercise of a profession or business. The prohibition has property law implications: any attempt to enforce such a clause will not just be contractually unenforceable, but legally ineffective. The Act also stipulates that any notifications required to transfer or pledge a receivable must be made in writing to the debtor to be legally effective - previously, there were no restrictions on form, but a written declaration of transfer or pledge has been long standing practice. This requirement does not apply to transfer or pledge of receivables that are excluded from the provisions of the Act.

The new Act applies to all receivables originating after 1 July this year. Pre-existing restrictions remain valid until 1 October, after which they will be automatically voided.

Exceptions – where restrictions still apply

Despite its sweeping nature, the Act carves out several important exceptions in the interests of preserving financial stability and operational clarity in certain sectors. These are sect out in section 3:83 paragraph 4 of the DCC.

For example, restrictions on transfers or pledges of claims on checking or savings accounts remain permitted. Receivables under multi-lender credit agreements are also exempted from the new general prohibition to facilitate coordination among creditors. Claims involving central banks, clearing houses and central counterparties are excluded, as well as receivables designated for tax and social security payments into blocked accounts, known as ‘g-accounts’.

Practical implications

Enhanced financing opportunities

The Act is a game changer for small and medium-sized enterprises, enabling them to unlock working capital by pledging or selling receivables that were previously subject to restrictive clauses.

Contractual rewrites required

Following the enactment of the Act, businesses may want to review and revise existing contracts to remove transfer or pledging prohibitions. If they do not do so, any clause that restricts transferability or pledging of business receivables will become unenforceable from 1 October.

Negative pledge and ‘pari passu’ clauses

Clauses between a creditor and a third party – for example, a lender – such as negative pledge or ‘pari passu’ provisions that ensure all creditors or lenders are treated equally in terms of their rights to repayment, remain valid. These are not affected because they don’t touch the relationship between the creditor and the debtor directly.