Dutch pledge reform to modernise security practice and ease access to finance

The change comes as the government brings to a close a public consultation on the proposed Act on the Modernisation of Pledge and Assignment (2 pages/ 82 KB). If adopted, the act would significantly simplify how Dutch businesses grant security over receivables.

Under current Dutch law, an undisclosed pledge over future receivables is only valid if those receivables arise from a legal relationship that already exists at the time the pledge is created. This technical limitation has shaped financing practice for years. To ensure that receivables originating from new legal relationships are captured as security, parties typically rely on a combination of master pledge deeds and periodic supplemental pledge deeds, which must be registered at regular intervals.

In practice, this principle is widely regarded as cumbersome and inefficient. Supplemental deeds are often not filed as frequently as intended or not at all, creating gaps in security coverage and increasing legal uncertainty. The administrative burden affects both financiers and borrowers, particularly in asset‑based lending structures where the portfolio of receivables is often central to the credit proposition.

The proposed legislation seeks to remove this restriction altogether. It would allow Dutch businesses to pledge current and future receivables, including those arising from legal relationships that do not yet exist at the time of granting security. In effect, this would bring Dutch “omnibus” security agreements closer to the English concept of a floating charge, without altering the existing regimes for mortgages or share pledges.

The draft legislation also proposes changes to how pledges can be perfected to ensure enforceability against third parties. The existing method of registration with the Dutch tax authorities – traditionally involving physical delivery of the pledge deed to the tax office in Rotterdam – will remain available but the act introduces alternatives designed to reflect modern contracting practices.

One such alternative is the use of digital timestamps, including those generated through electronic signature platforms such as DocuSign, in line with the eIDAS regulation – the legal framework for electronic identification across the EU.

In addition to supporting the ongoing digitalisation of legal transactions, accurate timestamping is expected to enhance legal certainty by clearly establishing the moment at which security is created. This helps determine creditor priority more transparently, particularly where multiple secured creditors are involved, by providing greater clarity as to which creditor holds the oldest and therefore senior claim against the borrower, while also reducing friction in financing processes.

In addition, the act introduces an open norm that would allow the legislator to recognise additional methods of perfection through secondary legislation by Orders in Council. While this flexibility could future‑proof the system, it has also attracted criticism from parts of the Dutch legal and business community. Critics argue that an open‑ended approach creates uncertainty as to which methods of perfection are sufficient to achieve ‘in rem’ effect, potentially undermining legal certainty for secured creditors.

From a commercial perspective, the changes are also very significant. One of the persistent challenges for Dutch businesses seeking financing has been the hurdle of continuous registration of agreements to achieve an appropriate coverage of collateral. For lenders, it promises a stronger and more comprehensive ‘in rem’ security position, with fewer administrative hurdles. It will also reduce the gap between bank lenders and non-bank lenders, where the latter are considered to be in a more negative position in terms of being able to comply with all administrative requirements

The consultation has now closed, and the proposal will move to the Dutch parliament. It remains to be seen which elements will survive the legislative process and in what form. However, there is broad support within the Dutch financing market to abolish the requirement for supplemental pledge deeds, which is widely seen as outdated and misaligned with modern commercial realities.

As the proposals progress through parliament, Lous Vervuurt and Gijs De Haan, financial regulation experts in Amsterdam, said it remains unclear what final form the legislation will take.

However, Vervuurt is confident the changes will have a transformative effect on the Dutch financial services industry. “It is clear that getting rid of the supplemental pledge deeds would to some extent alleviate Dutch financiers and businesses alike from admin burdens and grant more flexibility to offer security and attract financing,” she said.

If implemented as envisaged, De Haan said removing the existing restrictions on registration requirements would “end the outdated practice of filing supplemental pledge deeds” and make the “process of financing much less administratively burdensome for financiers”.