NETHERLANDS Law and Practice Contributed by: Eduard Scheenstra, Etiënne Courbois and Jenny Noordermeer, CMS
• carefully review all contracts to identify any reten- tion of title clauses; and • include covenants in the finance documents obliging the borrower not to acquire goods under retention of title, or to notify the lender immedi - ately if such goods are acquired; in such event, the borrower could be under an obligation to obtain a waiver from such party. 6. Enforcement 6.1 Enforcement of Collateral by Secured Lenders A security interest under Dutch law, such as a right of mortgage or a right of pledge, may only be enforced upon the occurrence of a default ( verzuim ) in respect of the secured payment obligation. The enforcement process is governed by the Dutch Civil Code and the Dutch Code of Civil Procedure, with the specific route depending on the type of security and specific arrangements as agreed between the parties. Mortgage Over Registered Assets The standard enforcement of a mortgage over reg- istered assets is through a public auction, following statutory procedures. Alternatively, a court-approved private sale may be requested if more efficient. Sale proceeds are used to repay the outstanding mortgage debt, accrued interest, and enforcement costs, with any surplus returned to the borrower or other entitled parties. Pledge Over Registered Shares Dutch law provides two main methods for enforcing a pledge over registered shares: • Public Sale (Auction): (a) The default method is a public sale (veiling) of the pledged shares. (b) The sale must be announced in accordance with statutory requirements, typically through a public notice. (c) The sale is usually conducted by a civil law notary. (d) The proceeds are used to satisfy the secured obligations, with any surplus returned to the pledgor.
• Private Sale (Negotiated Sale): (a) A private sale is possible if the court grants permission or if all interested parties (including the pledgor and any other secured creditors) consent. (b) This method is often preferred for practical reasons, as it may achieve a better price and is less cumbersome than a public auction. The transfer of shares must comply with the articles of association of the company and any applicable regu- latory requirements. Restrictions on enforcement are typically removed before the pledge is granted. Pledge Over Movable Assets Generally, enforcement follows the same procedures as described above under a pledge over registered shares. Pledge Over Receivables Enforcement is typically by collection of the receiva- bles, with the proceeds used to satisfy the secured debt. For a disclosed pledge, the debtor must be noti- fied of the default and/or enforcement. For an undis- closed pledge, the existence of the pledge must first be notified to the debtor before enforcement. Once notified, the debtor can only discharge the receivables by paying the pledgee. Generally, enforcement fol- lows the same procedures as described above under a pledge over registered shares. Pledge Over Intellectual Property Rights Generally, enforcement follows the same procedures as described above under a pledge over registered shares. However, certain intellectual property rights may be subject to specific statutory rules regarding enforcement, such as the Patents Act 1995 ( Rijksoc- trooiwet 1995 ). Security Over Financial Collateral The Collateral Directive (2002/47/EC) has been trans- posed into Dutch law, allowing security interests over securities ( effecten ), cash in bank accounts, and credit claims to be created through either a title transfer or a security financial collateral arrangement. There are no formalities required for establishing such security, except that the arrangement must be evidenced in writing (or an equivalent form) and the collateral must
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