The new law does away with the existing requirement that the grantor of a security interest in the form of a pledge of a moveable asset has to be dispossessed of the asset in order to create a valid enforceable security interest.
Under the new law it will become possible to create the security interest without any transfer of possession on the basis of a system of registration of the security interest. The old system of dispossession will continue to exist but will no longer be the only option. For registered interests ranking will be determined by the date of registration.
The possibility of creating a security interest to secure future debt up to a listed amount is also explicitly confirmed.
There are also new provisions easing the documentary requirements for the creation of the pledge and facilitating the sale or appropriation of the pledged assets, with however certain protective measures when the pledger is an individual consumer.
The notion of the taking and holding of security for the account of a third party is also introduced into Belgian civil law.
Last but not least, the rules relating for reservation of title and retention clauses have been extended, for which registration will continue to not be obligatory.
The new rules are expected to facilitate the granting of security over moveable goods in areas where the more liberal rules on financial security interests do not apply.
By: Charles Price