Regarding enforcement into shares or debt securities, the Draft Bill clarifies that such assets if admitted to trading on a trading venue (being defined in the Draft Bill as a Luxembourg or foreign regulated market, multilateral trading facility or organised trading facility) could be sold on such trading venue at their market price. The Collateral Law currently simply refers to a “sale over a stock exchange” without clear specification.
Regarding the appropriation of financial instruments, the Draft Bill creates a distinction between (i) the appropriation of financial instruments admitted to trading on a trading venue (which could, as the default option, be made at the market price of such financial instruments) and (ii) the appropriation of units or shares in a collective investment undertaking (which could, as the default option, either be made at their market price, if they are admitted to trading on a trading venue, or at the price of the last published net asset value, provided that the last publication of the net asset value is not older than one year).
Regarding the enforcement of pledges over units or shares in a collective investment undertaking, the Draft Bill provides that the pledgee may enforce the pledge by requesting the redemption of the pledged units or shares of such collective investment undertaking at their redemption price in accordance with the constitutional documents of such collective investment undertaking. This enforcement method could be of real interest to pledgees who are not in a position to easily enforce the pledge via appropriation or private sale. As a matter of fact, some pledgees may not be able to appropriate because they are unable to hold such units or shares directly or indirectly via a vehicle for regulatory or internal policy-related reasons. If the Draft Bill is passed as such, a pledgee would upon the occurrence of the enforcement event be able to simply access cash amounts by requesting the redemption of these instruments.
Regarding claims arising from insurance contracts, the Draft Bill provides that the pledgee may enforce the pledge by exercising all the rights arising under the pledged insurance contract. The Draft Law further details that such rights include, in the case of a life insurance contract or capitalisation transaction, the right to surrender such insurance contract or demand payment from the insurance company of any sums due under such contract.