The Belgian Act of 11 July 2013 on security over movables will introduce a modern system for registration of a pledge over movable assets against payment of a fee no higher than EUR 500. See our earlier client alert. The Act will enter into force on 1 January 2018.
As practitioners are preparing for the new system, the user manual on the national pledge registry published by the Belgian ministry of finance offers welcome practical guidance. In particular:
- There may be multiple pledgors for one and the same registration (paragraph 7.1.2). Although this is to be confirmed when the register becomes effective on 1 January 2018, this hopefully means that in such case the maximum registration fee of EUR 500 will be due only once.
If so, there will be an impact on documentation if a pledge is to be granted by different group companies. Indeed, it would then be recommendable not to multiply registration fees by having each group company enter into a separate pledge agreement. Rather, the different group companies should sign up to a single global pledge agreement with an aggregate secured amount and a single global registration.
- There may be multiple pledgees for one and the same registration (paragraph 220.127.116.11.9). If so, the first pledgee entering the registration can (but need not) make the effectiveness of the registration subject to the review of the other pledgees (paragraphs 18.104.22.168.8 and 11). Also, the pledgee entering the registration will need to indicate which of the pledgees will have the right to delete, renew or change the registration (paragraph 7.1.4).
Parties may wish to consider whether and to what extent documentation should be adapted in light of the above.
- If the pledge agreement is in English, the description of the pledged assets and secured liabilities needs to be entered in both the original English language and in a Dutch, French or German translation (paragraphs 7.1.3 and 7.1.5).
In terms of documentation, it would be advisable to agree on the Dutch, French or German translation in a schedule to or simultaneously with the pledge agreement.This will reduce the risk of errors and hence mitigate any risk of liability on the part of the pledgee.
- The maximum secured amount for which a registration can be made is EUR 9,999,999,999.99 (paragraph 7.1.5).
In the (highly unlikely) case that a higher secured amount is required, multiple registrations would seem an easy fix.
- Upon registration of a pledge, the national pledge register generates a pdf document evidencing the registration. Importantly, this pdf document will include among others a "UUID" (paragraph 7.10). This unique identification number will permit a change or even deletion of a registration by any party in possession of the identifier.
As such, the UUID may have a surprising effect in practice.The pledgee, which is required by the Act of 11 July 2013 to notify the pledgor of the registration, may for example be tempted to forward the pdf document to the pledgor.Similarly, it may be tempting to include the pdf document in a closing bible.In such cases, the pledgor would then (although this would be a manifest breach of its contractual obligations) be able to delete the registration.To avoid this unexpected result, we would recommend to at the very least blacken the UUID so that it becomes illegible.