Seizure of intangible rights: instructions for use

The seizure of intangible rights enables creditors to recover what is owed to them by seizing the debtor's shares, securities or other intangible assets. This specific procedure requires rigour and precision. For an in-depth understanding of their definition and scope of application, please see our article on intangible rights.

Targeting the right garnishee

The choice of garnishee determines the validity of the entire procedure.

For company shares: serve the deed on the company concerned.

For securities: refer to the issuing legal entity or the authorised intermediary, as appropriate. A specific instructions for the seizure of securities is also available to explore this point further.

Variants by title :

• Registered shares: company representative
• Bearer shares: intermediary holding the account
• Administered registered shares: intermediary managing the securities account

Any error as to the addressee may invalidate the seizure (Civ. 2e, 8 Dec. 2022).

Drawing up an irreproachable deed

Five compulsory details on pain of nullity :

1. Identity of the debtor
2. Enforceable title founding the seizure
3. Statement of amounts (principal, costs, interest) with interest rate
4. Indication of the unavailability of pecuniary rights
5. Summons to third parties to declare pre-existing seizures or pledges

The absence of the interest rate is sufficient to annul the deed (Civ. 2e, 31 May 2001).

The direct effects of seizure

Entering the file immediately makes it unavailable:

• The security itself (share)
• Related financial rights (dividends, interest)

The debtor remains the owner and retains his political rights (voting, information) but can no longer sell or pledge these securities.

There is a solution for the debtor: deposit a sufficient sum with Caisse des Dépôts to obtain a discharge.

Limited obligations of the garnishee

The garnishee must :

• Report previous seizures or pledges
• Do not obstruct the procedure

Surprisingly, it is not required to state the extent of the debtor's rights, unlike an attachment order.

Its liability in the event of default is limited to damages, a lighter penalty than for other seizures.

Prompt notification to the debtor

Strict time limit: eight days from service on the third party.

Content of the notice of termination :

• Copy of the seizure report
• Information on the one-month objection period
• Indication of the competent court
• Possibility of amicable sale
• Reproduction of the relevant articles of the code

If the deadline is not met, the seizure automatically lapses.

Pitfalls to avoid

Three fatal mistakes:

1. Exceeding the eight-day notice period Effect: immediately null and void with no possibility of catching up
2. Omission of an obligatory mention in the deed Effect: possible nullity if prejudice is demonstrated
3. Wrong garnishee Effect: total ineffectiveness of the procedure

You should also check that the seizure is proportionate to the debt claimed. The debtor also has the right to appeal, in particular to contest the seizurean aspect recently clarified by case law.

From seizure to sale

There are two ways of doing this:

For listed securities: simplified sale at market price, without auction.

For unlisted rights: more complex sale with specifications and auction.

In all cases, the debtor has one month to organise an amicable sale. To find out more about mechanisms and particularities of forced sales of these rights, a dedicated article is available.

Sources

• Code of civil enforcement procedures, articles L. 231-1 to L. 233-3 and R. 231-1 to R. 233-9
• Répertoire de procédure civile Dalloz, "Saisie des droits incorporels" (Rudy LAHER, 2023)
• Case law: Civ. 2e, 8 Dec. 2022, no. 19-20.143; Civ. 2e, 31 May 2001, no. 99-20.170; Civ. 2e, 8 Apr. 1999, no. 97-14.742

For personalised assistance in implementing or contesting a seizure of sharesOur lawyers are available to guide you through every stage of the procedure.