A savings bond is a financial instrument that enables a company to finance itself by borrowing directly from investors, outside the traditional banking channels. Long associated with a degree of opacity, notably because of its anonymous form, its legal regime has been extensively modernised to adapt to requirements for transparency and security of transactions. This article provides an overview of how it works, its legal nature and the changes that have affected this type of investment. Our firm, which operates in banking and finance lawThe report notes that understanding these instruments is essential for both issuers and subscribers. For a complete picture, it should be noted that certain specific aspects, such as taxation of savings bondsare covered in separate articles.
The legal nature of savings bonds: a constantly evolving classification
The legal status of savings bonds has long been a source of uncertainty, a situation that has been clarified by successive reforms. This evolution has transformed a flexible instrument into a more regulated one.
Before 31 October 2016: a legal blur between loans and negotiable securities
Prior to the major reform of 2016, bons de caisse were characterised by a succinct legal regime that created confusion as to their exact nature. They were considered to be negotiable instruments, which could be made out to order (transferable by endorsement) or to bearer (transferable simply by manual delivery). This negotiability brought them into line with bills of exchange, although case law and legal doctrine long debated whether this was the case. Their cause always resided in a loan contract, but their flexibility of transmission and possible anonymity made them an instrument on the borderline of several legal categories.
After 31 October 2016: registered and non-negotiable securities
The Order of 28 April 2016 put an end to the ambiguity by clearly redefining the savings bond. Since 31 October 2016, article L. 223-1 of the French Monetary and Financial Code has defined them as "non-negotiable registered securities". This change is fundamental: it eliminates anonymity, as each voucher must be registered in the name of its owner in a register held by the issuer. Moreover, by becoming "non-negotiable", the savings bond can no longer be circulated using the simplified mechanisms of commercial law (endorsement or tradition).
Key distinctions with transferable securities and commercial paper
The new definition clearly distinguishes savings bonds from other instruments. Unlike transferable securities (shares, bonds), they are not fungible and cannot be traded on a financial market. Each voucher represents a separate loan with its own characteristics. They also differ from bills of exchange and promissory notes, which are payment instruments intended for circulation. Cash vouchers, on the other hand, record a loan repayment claim and their transfer is subject to more stringent formalities.
Issuing savings bonds: conditions and legal obligations
The aim of regulating the issue of savings bonds is to protect subscribers while offering companies an alternative source of financing.
Authorised issuers: credit institutions and retailers
The issue of savings bonds is reserved for two categories of players. Firstly, credit institutions, which use them to collect savings. Secondly, retailers, whether individuals or commercial companies. For the latter, the law imposes a condition of maturity: they must have drawn up the balance sheet for their first commercial year. The aim of this requirement is to guarantee a degree of financial soundness and to prevent newly-created entities from taking in savings without a minimum of experience of their business.
Terms and conditions of issue: term, interest rate and ban on anonymity
Each issue must comply with specific rules. The term of the loan evidenced by the savings bond may not exceed seven years. In principle, the interest rate is freely set by the parties, but it must be fixed and may not be usurious. The main obligation since 2016 is the ban on anonymity. The issuer must keep a register showing the name of the owner of each bond and provide the subscriber with a certificate of registration. This transparency is an essential condition of the new regime.
The regulatory framework for public offerings and the banking monopoly
The issue of savings bonds is an exception to the banking monopoly, which prohibits any company other than a credit institution from receiving repayable funds from the public. The legislator has thus opened up a direct financing channel between companies and savers. However, this practice is regulated to protect public savings, particularly when the issue is similar to a public offering. The rules are designed to ensure that subscribers are provided with clear and fair information about the issuer's situation.
The circulation of savings bonds: transfer and securities
With the end of negotiability, the way in which savings bonds can be transferred or used as collateral has been completely overhauled and brought into line with ordinary debt law.
Assignment of savings bonds: rules of ordinary debt law
A savings certificate issued after 31 October 2016 can no longer be transferred by simple delivery or endorsement. Its circulation is now subject to the formalities of a debt assignment, governed by articles 1321 et seq. of the French Civil Code. Ownership is transferred in writing between the assignor and the assignee. For the assignment to be enforceable against the issuer (the debtor), it must be notified to the issuer or the issuer must take note of it. This formalisation makes circulation more cumbersome but increases the legal certainty of transactions.
Pledging of savings bonds: pledge and hypothecation
As an intangible asset representing a receivable, the savings bond can be used as collateral for another debt, for example to secure a bank loan. This operation is analysed as a pledge of a debt, a form of movable security. In order to be valid, the pledge must be in writing. To find out more about the general principles applicable, see our article on securities law.
The impact of insolvency proceedings and matrimonial property regimes
The circulation and value of a savings certificate may be affected by the legal situation of its holder. If collective proceedings are opened (safeguard, reorganisation or judicial liquidation), the holder's rights may be frozen or the claim may have to be declared as a liability. The impact of insolvency proceedings on security interests is a complex matter that may affect the realisation of the security. Similarly, if the savings bond is a joint asset between spouses, using it as security for a third party's debt requires the consent of both spouses, in accordance with article 1422 of the Civil Code. Lastly, a creditor may seek to recover his debt by seizing the savings bond, in which case he will use a specific procedure, seizure-attribution, which allows the debt to be seized directly from the issuer.
Cash voucher payments: debtor, beneficiary and statute of limitations
The final stage of the transaction, i.e. the repayment of the loan, is also governed by clear rules.
Determining the payer (solvens) and the beneficiary (accipiens)
The debtor of the repayment obligation (the *solvens*) is always the legal or natural person who issued the savings certificate. The beneficiary of the payment (the *accipiens*) is the creditor whose name is entered in the issuer's register. Keeping this register is therefore central, as it enables the person entitled to receive the funds on maturity to be identified unambiguously.
Terms of payment and proof of release
Payment is made on the due date specified in the savings certificate. It includes repayment of the capital loaned as well as the agreed interest. Proof of payment, which releases the issuer from its obligation, is provided by accounting entries and the updating of the voucher register. The physical delivery of a voucher is no longer relevant since vouchers have become registered.
The statute of limitations on actions for payment of savings bonds
An action for payment of a savings bond is time-barred in accordance with the rules of ordinary law. Case law has confirmed that, as savings bonds are not negotiable instruments, the five-year limitation period applicable to obligations between traders or between traders and non-traders (article L. 110-4 of the French Commercial Code) applies. The starting point for this period is the due date of the voucher.
The complexity of financial instruments, even when modernised, requires careful analysis. Our firm is at your disposal to advise you on how to use them and secure your transactions.
Frequently asked questions
What is a cash voucher?
A savings bond is a security representing the recognition of a debt by a company (the issuer) to an investor who has granted it a loan. It is a direct financing instrument, registered and non-negotiable, with a predetermined maturity and interest rate.
Who can issue a cash voucher?
The issue of savings bonds is authorised for credit institutions and for traders (individuals or commercial companies) who have already drawn up the balance sheet for their first financial year.
Are savings bonds anonymous?
No, since the 2016 reform, savings bonds can no longer be anonymous. They must be registered in the name of their owner in a register held by the issuing company.
How can a sales slip be passed on to another person?
Cash vouchers can no longer be transferred simply by handing them over. It must follow the rules for the assignment of receivables set out in the Civil Code, which means that a deed of assignment must be drawn up and notified to the issuer of the voucher.
What is the maximum duration of a cash voucher?
The maximum term of a loan evidenced by a savings bond is seven years. The repayment date must be determined when the bond is issued.
Can a savings bond be used as collateral for a loan?
Yes, a savings bond can be used as collateral. The operation is analysed as a pledge of a debt, a security that allows the creditor to be paid from the value of the voucher in the event of the debtor's default.
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