E-note 4 – The attachment of incorporeal movables (Professional E-note)

Ever since the Civil Code was introduced in 1992, there is no distinction between corporeal movables and incorporeal movables in the Netherlands, but there does exist a difference between assets and patrimonial rights.

If the Dutch law would still subscribe the mentioned difference, then the following patrimonial rights could be considered an incorporeal movable:

  • Bearer rights or rights to order;
  • Registered rights or registered securities – that aren’t rights – ;
  • Registered rights in NV’s and BV’s (kind of companies).

1. General remarks

Book 2 of the Dutch Code of Civil Procedure (Title 2, Section 1A) regulates concisely the enforcement of bearer rights or rights to order (art. 474a) and registered shares or securities (art. 474aa). It comes down to the fact that bearer rights need to be executed as tangible goods that aren’t registered property (as much as possible). The enforcement of registered securities and other assets have to be executed like the common attachment and execution procedure for shares in an NV or BV (art. 474c-I Rv). The general dispositions of the first title are also applicable to the enforcement here described.

The different forms of attachment will be discussed below.

2. Attachment of bearer shares

The execution of bearer shares and rights to order requires the possession of the paper bearer rights (art. 474, clause 1). Firstly, the paper will have to be attached with application of the rules for attachment of a tangible good, that isn’t registered property (section 1, art. 439 etc. Rv of the Dutch Code of Civil Procedure). Tangible goods can be attached with the creditor or a third party. If the paper is in the possession of the creditor or a third party, then an attachment with application of the relevant rules of section 2 is recommended (garnishment by garnishee order – art. 475 etc. Cp), c.q. of section 2a (art. 479 etc. Cp).

The final execution, the liquidation of the attached paper, can be effected in two ways, namely the executorial sale of the paper (art. 463 etc., art. 477 clause 5 Cp), or the recuperation of the amount due with the debtor of the paper. If the latter will not pay, for example because he contests the bearer right, the claim of payment can be attached. There is one condition: the claim must be exigible.

3. Attachment of nominal rights in NV’s and BV’s

Art. 474 c Cp provides a procedure for the enforcement of nominal rights in a NV or a BV. Some research in commercial registers or found administration or proof of shares might prove that the debtor is in the possession of such rights.

After the service of the executorial title to the debtor, the creditor can proceed to attachment (art. 430, clause 3 Cp). The attachment is made by a “bailiff’s copy/writ”, with notification of the attachment to the company. At that time the attachment must be published in the register of shares as soon as possible, mentioning the time of service. After the attachment has been made and published, the debtor will be notified.

4. Attachment of nominal rights and nominal securities, that aren’t rights

The enforcement of the nominal rights and securities intended (certificates of rights, rights of option, nominal participations or rights of membership in apartment cooperations) has to be made in the way that is prescribed for rights in a NV or BV. For “the next sections”, one has to read: “the next section”. The procedure is comparable with the garnishment procedure, meaning that the attachment is not made with the debtor, but with a third party that is bound through the security. If we apply an analogy, the administration office might intervene for the NV, in case of attachment on certificates.