Finance glossary

What is a pledge?

Qu’est-ce qu’un nantissement ?

A pledge is a legal instrument used to secure a debt to ensure payment to a creditor. This technique differs from a pledge in that the collateral offered is an intangible movable asset, such as a receivable or a share in the company’s capital. If the debt is not repaid on time, the asset can either be sold or retained by the creditor. To find out more about the definition of pledge, see the article below.

1. What is the definition of a pledge?


A pledge is a legal technique used to secure a debt for a creditor in the event of non-payment. This solution is achieved by making intangible personal property available as collateral, for example: shares in share capital, a patent, a property right or a receivable. This method makes it possible to secure financing between a debtor and a creditor. What’s more, the professional borrower retains possession of the asset for the period during which it is pledged. If the debt cannot be repaid, the creditor can apply to the Commercial Court to sell the pledged asset. Alternatively, the pledge will be lifted if the borrower succeeds in repaying the debt.

Which parties are involved in a pledge?

There are two parties:

  • the debtor: the professional in debt who has an obligation to repay the creditor
  • the creditor: the person to whom the debtor owes money

2. What is the difference between a pledge and a collateral?

The difference between a pledge and a surety lies in the form of the collateral.

A pledge relates to intangible movable assets such as receivables, business assets or company shares, whereas a pledge relates to tangible movable assets such as stocks, equipment, vehicles or property.

3. Why pledge collateral?

A pledge provides security for the creditor because it commits the debtor. It ensures that the debt is repaid. It may relate to the entire debt or just part of it, and to a current or future debt. The creditor then has priority over other creditors, who cannot be paid before the pledgee.

If the debtor fails to pay the creditor his debt, he can sell the pledged asset or have it sold to settle his debt.

4. How do I set up a pledge?

There are three stages to pledging: setting up the contract, registration and cancellation.

The contract

You can draw up either a notarised contract or a private agreement specifying that it is a pledge.

The following must be mentioned: the names of the parties, the date of the contract, and the nature and value of the asset.

In the case of business assets, it is also important to note tangible furnished assets.


Registration with the commercial court differs depending on the type of pledge. For example, for a pledge of shares in a company, the registration must be made at the commercial court registry in the town where the company holding the pledged shares is registered. Registration lasts for 5 years and may be renewed.


The pledge is finalised when it is no longer updated after the due date, if the debt is paid in full or if one of the parties requests that it be stopped.

Alternatively, you can check whether your customers’ assets have been pledged by requesting a statement of pledges from the commercial court registry or the tax authorities. This will tell you the amount owed, the names of the creditors and the company’s debt situation.


In conclusion, a pledged loan may be an option if you wish to reassure your creditors in order to secure a debt. Chetwode will be happy to help you set up your financing arrangements and advise you on the best way to take out a secured loan.

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