New Dutch Act aims to improve access to business financing

Quick read

On 1 July 2025, the Act on the Abolition of the Prohibition of Pledging (the Act) will enter into force. The Act renders contractual clauses that prohibit or restrict the assignment or pledge of monetary claims arising from business or professional activities void. This legislative change enables businesses to use receivables as collateral, thereby improving access to financing, particularly for small and medium-sized enterprises.

The need for change

Under Dutch law, parties to a contract can include clauses that exclude or restrict the assignment or pledge of receivables. In some industries, these contractual restrictions have become widespread.

As a result, these receivables cannot be used as collateral for credit financing or be assigned to third parties, such as factoring companies (which provide immediate cash to businesses by purchasing their outstanding invoices at a discount). These limitations prevent businesses from accessing credit or leveraging their receivables for financing purposes.

The new Act aims to remove these barriers, allowing businesses to use their receivables more freely as collateral.

Exceptions and transition period

While the Act applies generally to monetary claims arising from professional or business activities, certain exceptions remain — particularly in the context of financial transactions.

From the Act's effective date, assignment and pledge limitations will be null and void in new contracts. For existing contracts, this nullity will take effect after a three-month transition period, during which businesses should review and update all relevant agreements.