NETHERLANDS Law and Practice Contributed by: Folko de Vries, Ilse van Gasteren, Robert Smits and Stern Flik, Clifford Chance
5.5 Other Restrictions Works Council
straightforward release document, although in practice (often unnecessarily) complex combina - tions of terminations and waivers are seen. The timing of the release of security can be more complicated in case of an exit by the sponsor and the purchaser obtaining new financing. The release of security over receivables is often not notified to debtors (even if they were noti - fied of the creation of the security). The release of security over shares should be recorded in the relevant shareholder register. The release of security of real estate should be registered with the Land Registry by a notary. 5.7 Rules Governing the Priority of Competing Security Interests and/or Claims Dutch law recognises multiple security rights over the same asset. The order or priority of such security interests is typically determined by the order in which such security rights were created. That order can be contractually varied by the holders of the security rights. Subordination provisions are generally effective in the insolvency of a Dutch borrower. 5.8 Priming Liens and/or Claims The most important claims arising by operation of law are tax claims giving the receiver a pre - ferred position in insolvency. See also 7.2 Water- fall of Payments . 5.9 Cash Pooling and Hedging/Cash Management Obligations Cash Pooling Cash pooling is common in the Netherlands and typically documented by way of ancillary facil - ity or separately. The cash pooling provider will require first ranking security over certain receiva -
Companies or enterprises that employ at least 50 employees are required to have a works coun - cil. The works council has the right to advise on or, as the case may be, consent to certain management decisions. Matters on which the works council must be asked to advise include (i) change of control, which is likely to be relevant in the context of security over shares in a com - pany, (ii) entering into an agreement for a sub - stantial loan, either as lender or as borrower, and (iii) granting security (other than in the ordinary course of business) or becoming a guarantor for significant debts of another company. Hardening Periods Dutch law does not know the construct of hard - ening periods but does know the construct of fraudulent preference. Retention of Title Both retention of title and extended retention of title are known constructs under Dutch law. Anti-Assignment Provisions In 2018, a bill was published which invalidates contractual transfer/pledge restrictions in respect of trade and financial receivables ( Wet opheffing verpandingsverboden ). The implemen - tation of such prohibition is intended to improve access to credit for SMEs. Currently, due to con - tractual restrictions, SME trade receivables often cannot be used for their financing purposes. Receivables from bank accounts are excluded from the prohibition. 5.6 Release of Typical Forms of Security Security documents drafted for a financing between professional parties will typically per - mit the holder of the security to terminate the security by a simple notice. This allows for a very
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