Security interest law in Belgium

Guarantees

1. Can an intercompany guarantee be granted?

1.1 Upstream?

Yes, under certain circumstances.

1.2 Downstream?

Yes

1.3 Lateral?

Yes, under certain circumstances.

2. Can a guarantee be given under foreign law (e.g. English law)?

Yes

3. Any special arrangements (e.g. to deal with transfer pricing/corporate benefit)?

Needs to be permitted under the corporate purpose, in line with its corporate benefit and not to exceed its financial capacity. 
Limitation wording can be foreseen.

Security

4. Can a security interest be granted in the following type of asset?

4.1 Real property

Yes

4.2 Shares (privately held)

Yes

4.3 Shares (marketable securities)

Yes

4.4 Receivables

Yes

4.5 Bank account 

Yes

4.6 IP/Trademark

Yes

4.7 Equipment/Plant/Machinery

Yes

4.8 Inventory

Yes

4.9 Insurance

Yes

4.10 Rights under a contract

Yes

5. Can security interests be granted to a foreign lender?

Yes

6. Can multiple security interests be granted over the same asset? 

Yes

7. Can a security interest be granted to secure liabilities of a holding company, a subsidiary or any other affiliate?

Yes, under conditions set forth under question 3.

Perfection

8. In order to be enforceable against third parties, must a security interest be?

8.1 Notarised? 

 Only mortgages and mortgage mandates need to be notarized.

8.2 Registered?

Under the new law on security interests on moveable assets (entry into force expected to take place on 1 December 2014), enforceability against third parties of security interests on moveable assets shall occur either via a registration process or via physical dispossession of the secured assets in the hands of the security taker or a third party pledgeholder.

8.3 Other?

Physical dispossession (if registration route is not followed – see question 8.2)
Additional measures might need to be taken: 
Notifications to the debtor in case of pledge over receivables; 
Registration in the share register in case of pledge over shares privately held; 
Booking of financial instrument on a special account in case of pledge over marketable securities; 
Notification to IP/Trademark institutions in case of pledge over IP/Trademark.

9. Does registration in most cases protect the secured creditor against the debtor’s subsequent dealings with the secured asset?

 Yes

10. Is there any stamp or similar tax or duty payable on the security document?

Stamp duty is due on mortgages and mortgage mandates. Stamp duty will be due in case of registration of the security interest (see question 8.2).

Enforcement

11. For a security interest to be legally enforceable which items must be filed as part of the registration or notarisation process?

11.1 Entire security agreement?

No, except for mortgage.

11.2 Names of pledgor and pledgee?

Yes

11.3 Description of secured asset in general terms?

Yes

11.4 Description of each individual secured asset?

Yes

11.5 Documents concerning ownership of secured asset?

No, except for mortgage.

11.6 Documents concerning debt in respect of which the asset is being secured? 

No (except for mortgages where the credit agreement may be part of the notary deed).

12. Can a right to enforce security arise:

12.1 When the secured debt is unpaid and due?

Yes

12.2 When there is some other breach of the pledge/security agreement?

Yes (if contractually foreseen, which is generally the case)

12.3 When the debtor becomes insolvent?

Yes, but enforcement may be limited in case of judicial reorganization of the security provider. Also the creditor must take into consideration the rank of its security interest.

13. Can the creditor enforce its security interest by taking possession of the asset and selling it without court assistance?

Yes, in case of security interest on moveable assets (under the new law) or on financial collateral, if expressly foreseen in the security agreement. 
In case of mortgage, it is possible to sell the real property without prior court authorization only if the credit agreement was part of the notary deed.

14. Is an instrument for direct enforcement necessary/available/market practice?

See question 13.

15. Are powers of attorney to the secured party used to facilitate a sale of secured assets in an enforcement situation?

Security agreements generally include such PoA.

16. If a sale is permitted without court assistance does it have to be made by public auction?

No

17. Can a transfer of all or part of the debt be made without affecting the security over the assets?

Yes (except in case of novation)

18. Is there anything else of which a lender should be aware as unusual or particularly difficult?

Upon entry into force of the new law on security interests on moveable assets, banks will have a 12-month period to register their existing pledges over business assets (floating charge); otherwise they will lose their rank.