When a director wants to finance their business without mortgaging premises, when a borrower wishes to secure a bank loan with a life insurance policy, when a supplier seeks to secure a professional receivable: all mobilise the same mechanism – the pledge over intangible assets (nantissement). This real security covers incorporeal property – receivables, business funds, securities accounts, insurance policies, company shares – which often constitute the most readily mobilisable portion of a person’s or company’s estate.
Definition and legal foundations
Article 2355 of the Code civil defines the nantissement as “the allocation, in guarantee of an obligation, of an incorporeal movable or set of incorporeal movables, present or future.” Three characteristics: it is real (over property, not a person); movable (unlike a mortgage); incorporeal (distinguishing it from a gage over corporeal movables).
The distinction with the gage is central: since the ordonnance of 23 March 2006, “gage” is reserved for corporeal movable securities; “nantissement” covers only incorporeal ones. The 2021 reform modernised the whole: unified regime, national movable securities register, replacement of signification by simple notification, suppression of obsolete securities.
Pledge over receivables: the default regime
Articles 2356 to 2366 of the Code civil organise the reference model.
Constitution: Writing required on pain of nullity (Article 2356), precisely designating guaranteed and pledged receivables. May cover present or future receivables.
Opposability – dual mechanism: To third parties, the pledge takes effect from the date of the deed – no publicity required. To the assigned debtor, opposability requires notification (or intervention in the deed). Until notification, the debtor may validly pay the pledgor. Since 2021, simple notification (registered letter or any provable means) suffices – replacing the former costly signification by bailiff.
Effects – exclusive right to payment: Once notified, the pledgee alone may receive payment. This right prevails over subsequent attachments and resists insolvency proceedings against the pledgor. Three enforcement modes: direct collection at maturity; judicial attribution; pacte commissoire (automatic attribution clause).
The Dailly regime (Articles L. 313-23 et seq. CMF) offers a special regime for professional receivables via bordereau remittance – the privileged instrument for short-term business financing by credit institutions.
Pledge over a business fund (fonds de commerce)
Governed by Articles L. 142-1 et seq. of the Code de commerce. Three elements are included by law: clientele, sign and trade name, and lease right. Other elements (equipment, patents, trademarks) only if expressly mentioned. Excluded: merchandise and fixtures by destination.
Registration at the commercial court registry within one month of the deed – failure results in inopposability (since 2021, no longer nullity). Registration valid for ten years, renewable.
Key limitation: the pledgee has no right of retention over the fund and cannot seek judicial attribution (Article L. 142-1(2)). Their right is limited to preference and pursuit on the forced sale price. Combined with subordination to new-money and super-priority salary claims in insolvency, this makes the security less effective than it appears.
Pledge over securities accounts
Article L. 211-20 CMF governs the most effective guarantee in French law. Constitution by simple signed declaration – no notification to account-keeper required. The pledge covers the account as a fluctuating universality: securities entering and leaving are automatically subject to the security by real subrogation. The pledgor may continue active portfolio management.
Unmatched strengths: simplified enforcement (after formal notice, direct appropriation or market sale without court intervention); and a legal right of retention opposable even in insolvency, removing the pledgee from collective discipline.
Pledge over life insurance
Article L. 132-10 of the Code des assurances allows the policyholder to pledge the surrender value of a life insurance contract. Commonly used for interest-only (in fine) loans as an alternative to mortgage. Constitution requires an endorsement to the policy with the insurer’s agreement. The pledgee acquires exclusive right to the surrender value – prevailing even over tax authorities’ third-party notices (Cass. 2e civ., 2 July 2020, no. 19-11.417).
Pledge over company shares
Allows an associate to guarantee a debt by encumbering their shares without losing associate status. For civil companies: writing + publication on the movable securities register. For SARL and SNC: signification to the company + compliance with statutory approval clauses. Key practical difficulty: respecting the intuitus personae of the company when the pledgee may ultimately sell shares to a stranger.
Effects and enforcement
The pledgee benefits from a right of preference (paid before unsecured creditors on realisation), with rank depending on date of constitution/registration. A right of pursuit follows the pledged asset if transferred. Three enforcement modes: direct collection, judicial attribution, and pacte commissoire (where lawful). In insolvency, the pledge over receivables (once notified) is particularly robust – the pledgee’s exclusive right to payment resists the collective proceedings.
Solent Avocats acts in structuring pledge packages and in pledge enforcement litigation. See our securities guide and banking practice page.