{"id":44041,"date":"2023-03-21T12:06:00","date_gmt":"2023-03-21T10:06:00","guid":{"rendered":"https:\/\/www.e2.law\/?post_type=proceedings&#038;p=44041"},"modified":"2023-03-21T12:06:00","modified_gmt":"2023-03-21T10:06:00","slug":"garnishment-of-registered-company-securities","status":"publish","type":"proceedings","link":"https:\/\/www.e2.law\/en\/proceedings\/garnishment-of-registered-company-securities\/","title":{"rendered":"Garnishment of registered company securities"},"content":{"rendered":"<h2><div class=\"accordian fusion-accordian\" style=\"--awb-border-size:1px;--awb-icon-size:13px;--awb-content-font-size:16px;--awb-icon-alignment:left;--awb-hover-color:#f9f9f9;--awb-border-color:#cccccc;--awb-background-color:#ffffff;--awb-divider-color:#e0dede;--awb-divider-hover-color:#e0dede;--awb-icon-color:#ffffff;--awb-title-color:#333333;--awb-content-color:#747474;--awb-icon-box-color:#333333;--awb-toggle-hover-accent-color:#0da74c;--awb-title-font-family:&quot;Roboto Slab&quot;;--awb-title-font-weight:300;--awb-title-font-style:normal;--awb-title-font-size:14px;--awb-content-font-family:&quot;PT Sans&quot;;--awb-content-font-style:normal;--awb-content-font-weight:400;\"><div class=\"panel-group fusion-toggle-icon-boxed\" id=\"accordion-44041-1\"><div class=\"fusion-panel panel-default panel-d6cdfc9f5b2f20911 fusion-toggle-has-divider\" style=\"--awb-title-color:#333333;--awb-content-color:#747474;\"><div class=\"panel-heading\"><h4 class=\"panel-title toggle\" id=\"toggle_d6cdfc9f5b2f20911\"><a class=\"active\" aria-expanded=\"true\" aria-controls=\"d6cdfc9f5b2f20911\" role=\"button\" data-toggle=\"collapse\" data-parent=\"#accordion-44041-1\" data-target=\"#d6cdfc9f5b2f20911\" href=\"#d6cdfc9f5b2f20911\"><span class=\"fusion-toggle-icon-wrapper\" aria-hidden=\"true\"><i class=\"fa-fusion-box active-icon awb-icon-minus\" aria-hidden=\"true\"><\/i><i class=\"fa-fusion-box inactive-icon awb-icon-plus\" aria-hidden=\"true\"><\/i><\/span><span class=\"fusion-toggle-heading\">I. Can corporate securities be seized?<\/span><\/a><\/h4><\/div><div id=\"d6cdfc9f5b2f20911\" class=\"panel-collapse collapse in\" aria-labelledby=\"toggle_d6cdfc9f5b2f20911\"><div class=\"panel-body toggle-content fusion-clearfix\"><\/h2>\n<h2>I. Can corporate securities be seized?<\/h2>\n<p class=\"M1T\">Yes, company securities constitute intangible movable property which has a patrimonial value and all the movable and immovable property of a debtor is the common pledge of his creditors. The shares owned by a shareholder can therefore be seized by way of a garnishment procedure.<\/p>\n<p>The creditor garnishes the registered securities of his debtor in the hands of the issuing company. The fact that the shares are not freely transferable does not hinder the validity of the seizure, except where non-transferability is provided for by law <a href=\"#_ftn1\" name=\"_ftnref1\">[1]<\/a>.<\/p>\n<p>The seized third party company is obliged to declare the existence of registered shares registered in the name of the debtor when it is notified of a seizure of the securities held by one of its shareholders. It is required to make them unavailable<a href=\"#_ftn2\" name=\"_ftnref2\">[2]<\/a>.<\/p>\n<h2><\/div><\/div><\/div><div class=\"fusion-panel panel-default panel-74da2c75c582b3be1 fusion-toggle-has-divider\" style=\"--awb-title-color:#333333;--awb-content-color:#747474;\"><div class=\"panel-heading\"><h4 class=\"panel-title toggle\" id=\"toggle_74da2c75c582b3be1\"><a aria-expanded=\"false\" aria-controls=\"74da2c75c582b3be1\" role=\"button\" data-toggle=\"collapse\" data-parent=\"#accordion-44041-1\" data-target=\"#74da2c75c582b3be1\" href=\"#74da2c75c582b3be1\"><span class=\"fusion-toggle-icon-wrapper\" aria-hidden=\"true\"><i class=\"fa-fusion-box active-icon awb-icon-minus\" aria-hidden=\"true\"><\/i><i class=\"fa-fusion-box inactive-icon awb-icon-plus\" aria-hidden=\"true\"><\/i><\/span><span class=\"fusion-toggle-heading\">II. Which securities can be seized?<\/span><\/a><\/h4><\/div><div id=\"74da2c75c582b3be1\" class=\"panel-collapse collapse \" aria-labelledby=\"toggle_74da2c75c582b3be1\"><div class=\"panel-body toggle-content fusion-clearfix\"><\/h2>\n<h2>II. Which securities can be seized?<\/h2>\n<p>All securities that have sufficient asset value and transferability can be seized:<\/p>\n<ul>\n<li>shares<br \/>\nbonds and convertible bonds<br \/>\nshare certificates<br \/>\nprofit shares in public limited companies<br \/>\nsubscription rights<\/li>\n<\/ul>\n<blockquote><p>The seizure of subscription rights is difficult to do in practice, see <a href=\"https:\/\/www.e2.law\/fr\/2023\/03\/21\/les-droits-de-souscription-sont-ils-saisissables\/\">our dedicated article<\/a> (in french)\u00a0 for more information.<\/p><\/blockquote>\n<ul>\n<li>etc.<\/li>\n<\/ul>\n<h2><\/div><\/div><\/div><div class=\"fusion-panel panel-default panel-c6281a8369a5bc9e6 fusion-toggle-has-divider\" style=\"--awb-title-color:#333333;--awb-content-color:#747474;\"><div class=\"panel-heading\"><h4 class=\"panel-title toggle\" id=\"toggle_c6281a8369a5bc9e6\"><a aria-expanded=\"false\" aria-controls=\"c6281a8369a5bc9e6\" role=\"button\" data-toggle=\"collapse\" data-parent=\"#accordion-44041-1\" data-target=\"#c6281a8369a5bc9e6\" href=\"#c6281a8369a5bc9e6\"><span class=\"fusion-toggle-icon-wrapper\" aria-hidden=\"true\"><i class=\"fa-fusion-box active-icon awb-icon-minus\" aria-hidden=\"true\"><\/i><i class=\"fa-fusion-box inactive-icon awb-icon-plus\" aria-hidden=\"true\"><\/i><\/span><span class=\"fusion-toggle-heading\">III. What is the impact of restrictions on the transferability of securities?<\/span><\/a><\/h4><\/div><div id=\"c6281a8369a5bc9e6\" class=\"panel-collapse collapse \" aria-labelledby=\"toggle_c6281a8369a5bc9e6\"><div class=\"panel-body toggle-content fusion-clearfix\"><\/h2>\n<h2>III. What is the impact of restrictions on the transferability of securities?<\/h2>\n<h3 style=\"padding-left: 40px;\">A. Legal restrictions<\/h3>\n<p>Legal non-transferability is binding on creditors.<\/p>\n<ul>\n<li>\n<h4>Non-transferability of securities in &#8220;partnership&#8221; company<\/h4>\n<\/li>\n<\/ul>\n<p>Some partnership companies are formed solely on the basis of the person of the partners: the &#8220;<em>soci\u00e9t\u00e9s simples&#8221;<\/em>, the &#8220;<em>soci\u00e9t\u00e9s en nom collectif<\/em>&#8221; and the &#8220;<em>soci\u00e9t\u00e9s en commandite<\/em>&#8220;. In these cases, the law provides for the non-transferability of shares and is binding on seizing creditors.<\/p>\n<ul>\n<li>\n<h4>Restrictions on the transferability of shares in limited liability companies (SRL)<\/h4>\n<\/li>\n<\/ul>\n<p>Also in the case of limited liability companies for instance, in the absence of statutory provisions to the contrary, a shareholder who wishes to transfer shares must obtain the approval of the other shareholders. The seizing creditor is obliged to comply with the approval procedure if it is applicable in the company concerned.<\/p>\n<p>If he does not obtain approval, the distraining creditor, or the third party purchaser, may refer the matter to the president of the company&#8217;s court. If the refusal of approval is deemed arbitrary by the president, the judgment will be deemed to be approval.<\/p>\n<h3 style=\"padding-left: 40px;\">B. Contractual restrictions<\/h3>\n<p>Validly published restrictions are binding on the distraining creditor.<\/p>\n<p>Unpublished contractual restrictions, for example in a shareholders&#8217; agreement, cannot be set up against a third party seizing creditor, unless his bad faith is demonstrated.<\/p>\n<h3 style=\"padding-left: 40px;\">C. De facto limitations<\/h3>\n<p>Finally, the value of certain companies whose securities are legally transferable (or have been made transferable by the partners) is so closely linked to the person of their partners that it is, in practice, difficult to find a purchaser interested in buying the securities.<\/p>\n<p>It is also difficult to imagine what interest a seizing creditor or a third party purchaser would have in imposing his shareholding in a very small or family-owned company after, if necessary, judicial approval.<\/p>\n<p>In these cases, even if seizure is theoretically possible, it is hardly possible to envisage it.<\/p>\n<h2><\/div><\/div><\/div><div class=\"fusion-panel panel-default panel-1e1dd4f2dcc5b0d45 fusion-toggle-has-divider\" style=\"--awb-title-color:#333333;--awb-content-color:#747474;\"><div class=\"panel-heading\"><h4 class=\"panel-title toggle\" id=\"toggle_1e1dd4f2dcc5b0d45\"><a aria-expanded=\"false\" aria-controls=\"1e1dd4f2dcc5b0d45\" role=\"button\" data-toggle=\"collapse\" data-parent=\"#accordion-44041-1\" data-target=\"#1e1dd4f2dcc5b0d45\" href=\"#1e1dd4f2dcc5b0d45\"><span class=\"fusion-toggle-icon-wrapper\" aria-hidden=\"true\"><i class=\"fa-fusion-box active-icon awb-icon-minus\" aria-hidden=\"true\"><\/i><i class=\"fa-fusion-box inactive-icon awb-icon-plus\" aria-hidden=\"true\"><\/i><\/span><span class=\"fusion-toggle-heading\">IV. Seizure base<\/span><\/a><\/h4><\/div><div id=\"1e1dd4f2dcc5b0d45\" class=\"panel-collapse collapse \" aria-labelledby=\"toggle_1e1dd4f2dcc5b0d45\"><div class=\"panel-body toggle-content fusion-clearfix\"><\/h2>\n<h2>IV. Seizure base<\/h2>\n<p>The seizure may relate to the security itself and, therefore, to all the sums owed by the company to the holder of the security.<\/p>\n<p>However, there is nothing to prevent the creditor from limiting the seizure base to only part of the pecuniary rights attached to the security, provided that the claim exists at least in germ at the time of the seizure.<\/p>\n<h2><\/div><\/div><\/div><\/div><\/div><\/h2>\n<p><a href=\"#_ftnref1\" name=\"_ftn1\">[1]<\/a> Gand, 14 d\u00e9cembre 1993, <em>D.A.O.R., <\/em>1996, n\u00b0 38, 85.<\/p>\n<p><a href=\"#_ftnref2\" name=\"_ftn2\">[2]<\/a> Civ. Bruxelles (fr., sais.), 12 mai 2016, <em>J.L.M.B., <\/em>2017, 844.<\/p>\n","protected":false},"featured_media":0,"template":"","categories":[1],"tags":[1453,1454,1455],"class_list":["post-44041","proceedings","type-proceedings","status-publish","hentry","category-uncategorized","tag-seizure","tag-securities","tag-shares"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Garnishment of registered company securities - e2.law<\/title>\n<meta name=\"description\" content=\"Can corporate securities be seized? 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