French Monetary and Financial Code
In forceI. - The pledge of a securities account is constituted, both between the parties and in relation to the issuing legal entity and third parties, by a declaration signed by the account holder. This declaration shall include the particulars laid down by decree. The financial securities initially included in the pledged account, those substituted for them or added to them as security for the pledgee's initial claim, in any manner whatsoever, as well as, unless otherwise agreed by the parties, their fruits and proceeds in any currency, are included in the basis of the pledge. Financial securities and sums in any currency subsequently credited to the pledged account as security for the pledgee's initial claim are subject to the same conditions as those initially credited and are deemed to have been remitted on the date of the initial pledge declaration. The pledged creditor may obtain a securities account pledge certificate from the account keeper on simple request, including an inventory of the financial securities and sums in any currency registered in the pledged account on the date of issue of this certificate.
I bis -When the same securities account is the subject of several successive pledges, the ranking of creditors is governed by the order in which they are declared. In this case, the account holder or the pledged creditor notifies the account keeper successively of each pledge.
II. - The pledged account takes the form of a special account opened in the name of the account holder and held by an intermediary referred to in article L. 211-3, a central depository or, where applicable, the issuer.
In the absence of a special account, the financial securities referred to in the first paragraph and, where applicable, sums in any currency that have been identified for this purpose by a computerised process are deemed to constitute the pledged account.
III. - Where the financial securities held in the pledged account are held in an account kept by the issuer and the issuer is not a person authorised to receive repayable funds from the public within the meaning of Article L. 312-2, the income referred to in I and paid in any currency shall, where it has not been excluded from the basis of the pledge by agreement between the parties, be credited to an income account opened in the name of the holder of the pledged account in the books of an intermediary referred to in Article L. 211-3 or a credit institution. This entry may be made at any time. The fruits and products are deemed to form an integral part of the pledged account on the date of signature of the declaration of pledge, regardless of the date on which the fruits and products account was opened. The pledgee may obtain, on simple request to the holder of the fruit and produce account, a certificate containing an inventory of the sums in any currency credited to this account on the date of issue of this certificate.
If there is no entry to the credit of a fruit and produce account on the date on which the security can be enforced, the fruit and produce are excluded from the basis of the pledge.
IV. - The pledgee defines with the securities account holder the conditions under which the latter may dispose of the financial securities and sums in any currency held in the pledged account. In any event, the pledged creditor has a right of retention over the financial securities and sums in any currency held in the pledged account.
V. - In the case of French or foreign financial securities admitted to a trading platform, units or shares in collective investment undertakings, and sums in any currency, the pledgee with a claim that is certain, liquid and due may realise the pledge, whether civil or commercial, eight days - or on expiry of any other period previously agreed with the account holder - after the debtor has served formal notice by hand or by registered post. The debtor's formal notice is also served on the pledgor if he is not the debtor, and on the account holder if he is not the pledgee. The pledge is realised in accordance with procedures laid down by decree.
For financial instruments other than those mentioned in the previous paragraph, the secured creditor with a claim that is certain, liquid and due may realise the pledge, whether civil or commercial, eight days after formal notice has been given by the debtor in person or by registered letter with acknowledgement of receipt, failing another period agreed in advance with the account holder. The debtor's formal notice is also served on the pledgor if he is not the debtor, and on the account holder if he is not the pledged creditor. The pledge is realised by public sale. The creditor may also request judicial allocation of the pledged securities or agree to their appropriation in accordance with articles 2347 and 2348 of the Civil Code.
VI. - The provisions of V of this article relating to the realisation of the pledge apply to pledges of financial securities constituted prior to 4 July 1996.
VII. - A decree of the Conseil d'Etat shall specify the procedures for applying this article to pledges of financial securities registered in a shared electronic recording system referred to in article L. 211-3.
