Procedures Guide

The Procedures guide allows entrepreneurs and decision-makers to have a reliable, precise and up to date overview of legal procedures and measures concerning commercial formalities to be undertaken. It is broken down into 6 sections in which you can find information and documentation required for formalities with Registry Offices at the Commercial Courts.

Pledge without repossession

Order No. 2006-346 of 23 March 2006 modernised surety law. New guarantees, such as pledge without repossession, can be undertaken by creditors and must be published in a register entrusted to the clerk of the commercial court.

Definition

The pledge is an agreement whereby the pledger grants to a creditor the right to be paid before its other creditors on a fixed asset or a set of present or future tangible fixed assets.

Conditions

With respect to guaranteed debt: such can be present or future on the condition of determinability.

With respect to the settlor: the pledge can be consented to by the debtor or a third party.

With respect to the property: the category to which the collateral belongs is made by reference to the fixed nomenclature of the Order of 1 February 2007.

Collateral is classified into the following categories:

1 Animals (Category 1)

2 Watches and jewellery (Category 2)

3 Musical instruments (Category 3)

4 Machinery, equipment and products for professional use not addressed in other categories (Category 4)

5 Equipment for non-professional use other than computer equipment (Category 5)

6 Sports equipment (Category 6)

7 Computer equipment and accessories (Category 7)

8 Furnishings (Category 8)

9 Intangible property other than shares in companies (Category 9)

10 Currency (Category 10)

11 Collectible art works and antiques (Category 11)

12 Shares in companies (Category 12)

13 Products for printing, press and other graphic industries (Category 13)

14 Non-combustible liquids (Category 14)

15 Textiles (Category 15)

16 Food products (Category 16)

17 Others (Category 17).

Form: the pledge is completed by the establishment of a writing containing the name of the debt guaranteed, the quantity of property pledged as well as their kind or nature.

Contestability

The pledged is contestable by third parties from its publication. It is published by registration in a special registers (Article 2338 of the Civil Code).

Registration process

Such is governed by Decree No. 2006-1804 of 23 December 2006, effective 1 March 2007. Registration is made at the request of the creditor in the special register kept by the registrar of the commercial court within the jurisdiction in which the pledger is registered or, if it is not subject to the registration requirement, in the jurisdiction where its registered office or domicile is located, as applicable.

The court clerk assigns a case number to the pledge instrument.

The creditor files or sends to the clerk of the commercial court an original of the security instrument, or a copy, if the instrument is certified.

Two copies of the registration form are attached to the instrument.

Click here to obtain a registration form for a pledge without repossession

Consequences of publication with respect to creditors

When the same property is subject to several successive non-possessory pledges, the ranking of the creditors is governed by the order of their registration.

When a property subject to a pledge without repossession made after the subject of a pledge with repossession, the prior preferential creditor rights are contestable by subsequent creditors when it has been published on a regular basis despite the pledge rights of the latter.

The creditor may exercise a forfeiture of the term of the guaranteed debt or request an amendment to the pledge if the settlor does not satisfy its retention requirements.

In the event of payment default of the guaranteed debt, the creditor may judicially order sale of the property or have it awarded to him.

Consequences of publication with respect to settlors

When the pledge relates to fungible goods (interchangeable), the settlor may transfer them of the agreement anticipates their replacement by the same quantity of equivalent property.

Registrations normally made take effect as of their date. Registration preserves the pledge for five years from its date. It effects ceases if the registration is not renewed before the expiration of this period. In such event, the court clerk automatically proceeds with removal of the registration.

Renewal

The creditor, or the debtor, hoping to proceed with renewal of an initial pledge registration must address itself to the clerk of the commercial court which made the initial registration or to the clerk of the commercial court in the jurisdiction in which the company whose shares are pledged is registered. For this purpose, the declarer must use a renewal registration form.

Marginal references

The request for a modifying registration is made to the clerk of the commercial court with respect to which the security is registered, notwithstanding change of headquarters or of domicile of the settlor. The modifying registration form is established by the requesting party in two copies and is filed or addressed to the court clerk directly. Modifications affecting the initial information are marginally published on the existing registration.

Prices

(PRICES INCLUDING TAX; EXCEPT FOR CATEGORIES 9 AND 12: SEE "PLEDGE OF COMPANY SHARES")

Payment to the order of the relevant GREFFE DU TRIBUNAL DE COMMERCE.

REGISTRATION (including postal costs)

For a debt of less than 7,800 euros: 13.99 euros.

For a debt equal to or exceeding 7,800 and less than 20,800 euros: 26.47 euros.

For a debt equal to or exceeding 20,800 euros: 73.27 euros.

REFERENCE TO PRECEDENCE, SUBROGATION AND RENEWAL (including postal costs)

For a debt of less than 7,800 euros: 9.31 euros.

For a debt equal to or exceeding 7,800 and less than 20,800 euros: 15.55 euros.

For a debt equal to or exceeding 20,800 euros: 38.95 euros.