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1. What is collateral?
Pledge is a technique of Debt guarantee. An owner of an intangible asset then assigns it as security, without losing possession of it, to a creditor, who may, if the obligation inherent in this guarantee is not respected, charge on the forced sale price of said property. The owner of the pledged property is called the” constituting ”. The latter can then no longer sell the pledged asset without the authorization of the creditor.
In addition, although banned for a long time, it is now possible to do a Commissory pledge agreement. This commission pact makes the creditor the owner of the asset pledged in the event of non-compliance with the debtor's obligation. In other words, if the debt has not been honored, the creditor automatically becomes the owner of the pledged asset.
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2. What assets can be pledged?
All the intangible personal property can be pledged. This applies in particular to a debt, business, agricultural property, agricultural land, lease rights, but also securities, life insurance contracts, patents, trademarks, copyright, or even a bank account balance (non-exhaustive list).
All these assets can therefore be used as security for one or more debts of a debtor.
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3. Pledge, pledge & mortgage distinction:
Often confused, pledge, pledge and mortgage are security rights, allowing a creditor to be guaranteed payment of the debtor's obligation.
So, as said supra, the pledge relates to intangible personal property, the most frequently encountered in practice being the pledge of business assets.
Conversely, the pledge concerns tangible personal property.
It should be noted that there are two types of pledges and collateral. In fact, a distinction is made between pledges and pledges. without possession of the grantor And those with dispossession. When the security is provided without possession, the grantor cannot sell the collateral without The creditor's authorization. Nevertheless, he remains the owner, and therefore retains possession of it. On the contrary, pledges and pledges with possession, as their name suggests, allow the creditor to come into possession of the collateral in the event of default in the event of failure to repay the debtor's debt.
Mortgages, on the other hand, only cover real estate. Thus, it is possible for a debtor to place the building or buildings of his choice as collateral, which will then become mortgaged. The mortgage creditor can then, if the obligation is not met by the debtor, Forcing the sale of the building in order to get paid first.
In summary, the Gage focuses on tangible personal property, The mortgage Concerns the real estate, while the Pledge Concerns the intangible personal property.
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4. From a formal point of view...
The pledge must be concluded by written. In addition, it must be signed by both parties to the act, the grantor and the creditor. This act must also, under pain of nullity, designate the assets pledged and the claims secured by the pledge. It should be noted that if the claims do not currently exist, and if they are only future, the pledge contract must individually designate or make identifiable each claim, in particular by indicating, in particular, the place of payment, the identification of the debtor, the identification of the debtor, the amount of the claims or their estimates, and their possible due dates (Article 2356 of the Civil Code).
In addition, this pledge contract may be drawn up under private signature (formerly “private act”, i.e. drawn up between the parties and subject to no formalism except the signing of the act). In this case, the pledge must be registered by the creditor in a register kept by the registry of the commercial court. Also, the contract can be drawn up in the form of a notarial act. Moreover, the pledge is only enforceable against the debtor if the debtor has been notified of the debtor or if he has acted in the act (Article 2362 of the Civil Code).
These writing and publishing requirements are necessary in order to make it enforceable against third parties the current pledge on such property (Article 2361 of the Civil Code), and thus prevent the debtor from selling said property to a third party, while the latter would be pledged, without the knowledge of the creditor. It is thus a measure of safeguarding offered to the creditor and his interests.
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5. The effects of collateral
According to Article 2363 of the Civil Code, provided that it is notified, the pledge offers the creditor an attractive protection. In fact, if the secured claim (the obligation) has expired front the secured claim, the amounts paid in respect of the latter are charged against the secured claim. However, in the event of default by the debtor, the obligee may have the pledged debt and all associated rights awarded by court or wait for the due date of the pledged debt (Article 2365 of the same code). On the contrary, if the secured claim is due thereafter the pledged debt, the creditor can collect the amounts due under the pledged debt (Section 2364).
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6. What about the pledge of securities? Is that possible?
According to Article 2355 of the Civil Code, it is also possible for a creditor to request a title guarantee of its debtor. Indeed, a partner in a company may be required to grant a pledge on his shares or shares. The latter must take into account that by doing this, he is losing part of the ownership of his titles, and that he will not then be able to enjoy them in their entirety.
In summary, the pledge of securities is securities given as collateral, for example for a loan. Indeed, it is common for a partner of a company to grant such a pledge to his banker, who requires it before granting him (to himself or to the company) a bank loan. The partner is therefore the debtor of the obligation to repay the loan, and the bank is the creditor. If the loan is not repaid at the agreed term, the shares held by the partner may be transferred to the collateral creditor. La Ownership of the shares is therefore transferred.
From the point of view of advertising the pledge, the creditor must form a notice of pledge of shares, allowing him to request the registration of the pledge in the central file kept by the clerks of the commercial court. It is in fact, as said supra, a means of protecting the interests of the creditor, so that the pledged assets are not sold to a third party as a result of the bad faith of the obligor of the obligor. In addition, the securities given as collateral are deemed to be not transferable to a third party without the consent of the secured creditor.
It is in this perspective of clarifying the rights and duties of each party that a certain formalism is required in the constitution of the pledge of securities.
In fact, the pledge of titles follows the rules of pledge of tangible property, according to article 2355 In fine. This is the case for the formalities of advertising the pledge, as explained above. supra, as well as the cancellation of registration, in accordance with article 8 of Decree 2006-1804 of 23 December 2006. According to this article, such cancellation may take place at the request of the creditor, or of the pledger, if it can justify the creditor's acceptance to cancel the registration. In addition, it may occur as a result of an act discharging the registration, or pursuant to a final decision.
Finally, it should be noted that there is an exception concerning the pledge of shares. In fact, the pledge of shares in professional civil society (SCP) of an exclusively liberal profession is not possible.
The digital security pledge planned by Axiocap:
Since the Decree No. 2018-1226 of 24 December 2018, it is allowed to dematerialize movements of securities and their registers. Thus, on a single online medium, you can make any movement of securities.
Find the legal summary on the dematerialized register of movements of securities.
Axiocap offers you to create shares (subscription to the constitution or when creating a company), to issue titles such as BSA, BSPCE, to transfer assets (transfer, donation, contribution), to make title loans but also to make security pledges online in a very intuitive way.
Very simply choose the type of security to be pledged, the creditor (s) of the pledge, the number of shares to be pledged and the dates of the pledge. The pledge will automatically be visible in your shareholder area!
So what are you waiting for? Do not hesitate any longer, dematerialize your title registers and automate the management of your collateral easily with Axiocap.
