An unpaid creditor has a number of weapons at his disposal to recover what is owed to him. These include the seizure of securities, which is part of the wider framework of the seizure of intangible rightscan be daunting. But the subject is full of technical subtleties that sometimes turn this procedure into an obstacle course.
Securities: an ever-changing concept
For a long time, securities simply referred to stocks and bonds. Today, their definition has become more complex with the financialisation of the economy.
Article L. 228-1 of the French Commercial Code defines them as "financial securities within the meaning of Article L. 211-1 of the French Monetary and Financial Code, which confer identical rights by category". They fit together like Russian dolls with other legal concepts, making it difficult to define them. seizure of partnership rights and securities particularly technical.
This constant evolution creates a grey area for creditors. How do you seize an asset whose very nature is constantly changing?
What securities can be seized?
The "classic" values remain logically seizable:
- Shares (partners' rights in a limited company)
- Bonds (debt securities issued by a company)
- Equity securities
- Treasury securities
But what about more exotic financial instruments?
Warrants (speculative derivatives) and certificates of guaranteed value give rise to doctrinal debates. Their seizability often depends on their legal classification by the courts.
The limits: when data capture stops
On principle, some values cannot be entered:
- Securities allocated to employees under savings plans (unavailable for 5 years)
- Non-transferable shares allocated for profit-sharing purposes
- Shares subscribed by options granted to executive directors
- Temporarily non-transferable free shares
- Securities giving access to the capital of a company in reorganisation
- Shares included in a disposal plan until paid in full
This non-seizability stems from the principle set out in article L. 112-2 of the Code of Civil Enforcement Procedures: "assets that the law renders non-transferable" are non-seizable.
The dematerialisation revolution
Since the Act of 30 December 1981, securities have no longer been evidenced by paper but by a simple book entry. This digital transformation radically alters the way they are recorded.
The dematerialisation of securities has maintained the distinction between registered and bearer securities, although the term "bearer" now seems anachronistic. A more accurate term would be "anonymous" securities.
This change directly affects the data entry procedure:
- For registered shares: registration is made with the issuing company
- For bearer securities: the financial intermediary becomes the garnishee
- For intermediary registered shares: the authorised intermediary receives the certificate of seizure.
Practical guide: seizing securities in 4 steps
The procedure for seizing securities follows specific stages within the general framework of the seizure of intangible rights.
1. Correctly identify the garnishee
The Code of Civil Enforcement Procedures (art. R. 232-1) stipulates that the seizure must be served "on the issuing company or legal entity".
There are exceptions:
- Registered securities managed by a proxy: registration with the proxy
- Administered registered shares or bearer shares: registration with the financial intermediary
Mistaken identity of the garnishee renders the procedure ineffective.
2. Carefully draft the seizure document
In addition to the standard information contained in bailiff's documents, the document must contain the following, failing which it will be null and void:
- Precise identification of the debtor
- Indication of the writ of execution founding the seizure
- Detailed statement of amounts claimed with interest rate
- Indication of the unavailability of pecuniary rights
- Summons to provide information on possible pledges or seizures
Rigour pays off. A simple omission of the interest rate can render the deed null and void.
3. Notify the debtor of the seizure
This stage is crucial. The creditor has eight days to inform the debtor of the seizure.
The notice of termination must contain:
- A copy of the seizure report
- Information on how to challenge the decision
- Mention of the one-month deadline for an amicable sale
- For listed securities, the indication that the debtor may choose the sell order
In the event of omission, the penalty is severe: the seizure lapses.
4. Proceed with the sale
After seizure and denunciation, the final stage is the sale of the seized securities. The mechanisms of forced sale of intangible rightsThe nature of the securities concerned varies.
The method varies depending on whether the securities are listed or unlisted:
- Amicable sale possible at debtor's initiative within one month
- Forced sale at market price by an investment services provider
- No auction, just a sale on the day
For unlisted securities:
- Amicable sale under creditor control
- Failing this, sale by public auction
- Need for specifications
- Notification to the company and opposing creditors
- Compliance with approval procedures specific to each type of company
The second, much more cumbersome procedure explains why creditors often prefer to use seizure as a means of exerting pressure rather than seeing it through to the end.
This whole complex legal mechanism reflects a delicate balance: protecting the creditor's rights while preserving the corporate order. For expert advice and tailor-made support in the seizure of securities or company shares, we recommend that you call on the services of a specialist lawyer.
Sources
- Code of civil enforcement procedures, articles L. 231-1 to L. 233-3 and R. 231-1 to R. 233-9
- French Commercial Code, Article L. 228-1
- Monetary and Financial Code, articles L. 211-1 et seq.
- Répertoire Dalloz de procédure civile, "Saisie des droits incorporels" by Rudy Laher, July 2023
- Court of Cassation, Civil Division 2, 31 May 2001, No. 99-20.170
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