In an economic world where financial assets play a predominant role, creditors must adapt their collection strategies. Shares and other financial instruments often represent a substantial proportion of debtors' assets. Knowing how to seize them can prove decisive in securing payment of a debt.
Precautionary attachment of securities and partnership rights
The Code of Civil Enforcement Procedures (CPCE) makes a distinction between company shares and securities.
Company shares are fractions of the share capital and do not have the characteristics of transferable securities. They mainly concern partnerships.
Transferable securities, as defined in article L.211-2 of the French Monetary and Financial Code, cover a broader spectrum: shares, SICAVs, investment certificates, bonds, securities representing public borrowings, equity securities, warrants, etc.
Partners' rights" generally refers to shares in partnerships, while "securities" refers to securities issued by limited companies.
Other intangible rights not expressly mentioned in the legislation may be seized. The Court of Cassation has ruled that "the licence to operate a 4th category public house constitutes a seizable intangible right" (Cass., opinion, 8 Feb. 1999, no. 09-80.015).
Implementing the seizure
The addressee of the writ of attachment
Article R.524-1 of the CPCE states that the creditor carries out the seizure by serving a document on one of the persons mentioned in articles R.232-1 to R.232-4 of the same code.
In principle, shareholders' rights and securities are seized from the issuing legal entity. However, with the dematerialisation of securities, there are exceptions to this principle.
Entries can be made to :
- the representative of the company holding the registered share accounts
- the authorised intermediary holding the bearer securities accounts
- the intermediary managing both bearer and registered shares
- the intermediary responsible for administering the registered securities account
The issuing company must inform the bailiff of the name of the agent or intermediary that holds its accounts if the seizure cannot be carried out directly with the issuing company.
The content of the writ of attachment
Under penalty of nullity, the seizure document must contain the information specified in article R.524-1 of the CPCE:
- the identity of the debtor
- the title or authorisation of the judge
- a breakdown of the sums to be seized
- an indication that the seizure renders unavailable the pecuniary rights attached to all the shares or securities
- a summons to disclose the existence of any pledges or seizures
Unlike in the case of seizure of receivables, a garnishee who does not respond to this summons can only be ordered to pay damages and not to guarantee the causes of the seizure (Civ. 2e, 3 May 2001, no. 99-18.672).
Notice to the debtor
The seizure must be served on the debtor by bailiff within eight days, failing which it will lapse (article R.524-2 of the CPCE).
The notice of termination shall contain :
- a copy of the title or authorisation
- a copy of the seizure report
- information on the debtor's right to request discharge
- designation of the competent court for disputes
- the reproduction of articles R.511-1 to R.512-3 of the CPCE
The effects of seizure
The unavailability of pecuniary rights
The act of seizure renders the debtor's pecuniary rights unavailable (article R.524-3 referring to article R.232-8 of the CPCE).
This unavailability applies to all securities registered in the debtor's name. It is total and not limited to the amount of the distrainor's claim, which is a major difference from the protective attachment of claims.
The Court of Cassation has ruled that "distributable profits attached to seized shares are pecuniary rights of the debtor and are therefore included in the protective seizure" (Civ. 2e, 21 June 2007, no. 06-13.386).
Maintaining political rights
Only property rights are affected by the seizure, not political rights. The debtor therefore retains his voting rights and can take part in general meetings.
However, they lose the right to assign, pledge or hypothecate their rights, as well as the right to receive dividends.
Conversion to seizure and sale
When the creditor obtains a writ of execution, he can convert the protective attachment into an attachment for sale by serving a conversion document on the debtor.
Under penalty of nullity, this document must contain (article R.524-4 of the CPCE) :
- reference to the seizure report
- the enforcement order
- a statement of amounts due
- a summons to pay under penalty of forced sale
- information on the one-month deadline for making an amicable sale
- specific procedures for listed securities
A copy of the conversion deed must be served on the garnishee (article R.524-5).
Out-of-court sales
The debtor has one month to sell the seized securities out of court.
For unlisted securities, he must inform the bailiff of the proposals received. The bailiff communicates them to the distraining creditor and opposing creditors, who have 15 days to comment. Their silence is deemed to be acceptance.
In the case of listed securities, the debtor may instruct the garnishee to sell the securities. The proceeds of the sale remain unavailable and are used to pay the creditor.
Forced sale
If no amicable sale is made within the time allowed, the creditor may proceed to a compulsory sale.
For listed securities, he asks the brokerage company to proceed with the sale by presenting a certificate attesting to the absence of any dispute or the judgment of rejection.
In the case of unlisted securities, special procedures are laid down for drafting and notifying the specifications, as well as for publication formalities.
Sources
- Code of civil enforcement procedures, articles L.521-1, L.531-1, R.524-1 to R.524-6
- Monetary and Financial Code, article L.211-2
- Cour de cassation, opinion of 8 February 1999, no. 09-80.015
- Court of Cassation, 2nd Civil Division, 3 May 2001, No. 99-18.672
- Court of Cassation, 2nd Civil Division, 21 June 2007, no. 06-13.386
- PIÉDELIÈVRE Stéphane and GUERCHOUN Frédéric, "Saisies et mesures conservatoires", Répertoire de procédure civile, Dalloz, June 2021.
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