The reform of the law on sureties radically modernises the formalities involved. Ordinance 2021-1192 of 15 September 2021 incorporates digital tools. These changes meet the needs of a digital economy.
The end of handwritten formalities for surety bonds
The protective formalism of surety bonds remains in place, but is evolving. Article 2297 of the Civil Code now requires that "the guarantor, who is a natural person, affix the endorsement himself". The text abandons the strict requirement for a handwritten endorsement.
The amendment to article 1175 of the Civil Code removes the exception that prohibited the electronic conclusion of sureties. This paves the way for the complete dematerialisation of sureties.
The report to the President of the French Republic states that "the process must guarantee that the endorsement is the result of an action taken by the guarantor himself". Secure identification thus replaces the handwritten gesture.
Electronic signature of guarantee documents
Article 1367 of the French Civil Code requires two conditions for an electronic signature:
- Identification of the signatory
- Guaranteeing the integrity of the document
These conditions now fully apply to sureties. The guarantor may sign electronically, provided that the system ensures reliability and traceability.
For conventional security interests, only mortgages remain subject to the requirement of a notarial deed. Other securities (pledges, collateral, trusts) can be created electronically.
Electronic advertising registers
The ordinance centralises the publication of non-possessory pledges. Article 2338 provides for a single register, "the terms and conditions of which shall be regulated by decree".
Decree no. 2021-1887 of 29 December 2021 establishes a national register of non-possessory pledges. This centralised register replaces the numerous special registers.
Only the pledge on a motor vehicle retains a special publicity regime. Article 2338 paragraph 2 maintains the requirement for registration "in a register kept by the administrative authority".
The use of blockchain and smart contracts
Although the ordinance does not explicitly mention blockchain technologies, its technology-neutral approach allows them to be used.
Security trusts and the transfer of sums of money could be automated by smart contracts. These computer programmes automatically execute the terms of a contract.
Advertising registers could also incorporate blockchain technology, guaranteeing the inalterability and transparency of entries.
Practical benefits of dematerialisation
The dematerialisation of securities offers tangible benefits:
- Reduced treatment costs
- Speeding up procedures
- Securing archives
- Facilitating due diligence
- Accessibility of information
For surety bonds, the professional creditor may now send the mandatory information (article 2302) electronically. This option reduces management costs.
Electronic consultation of publicity registers enables creditors to quickly check the existence of prior security interests.
Precautions and transitional measures
Dematerialisation raises security issues. Financial institutions must guarantee:
- Data integrity
- Certain identification of the signatory
- Preservation of evidence
- Protection against fraud
Article 37 of the Ordinance provides for a deferred entry into force for certain provisions. The national register of non-possessory pledges will come into force on 1 January 2023.
Legal professionals must adapt their IT systems to these new requirements. Our firm has developed specific expertise in securing electronic securities. Contact us for personalised support in this digital transition.
Sources
- Order no. 2021-1192 of 15 September 2021
- Decree no. 2021-1887 of 29 December 2021
- Civil Code, articles 1175 and 1367
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