1. Simplified Assignation of Rights: Businesses can assign rights (e.g. debts or rental income, or shares in a company) by registering in the new Register of Assignations, avoiding the need for repeated notifications to third parties.
2. The Statutory Pledge: A new form of fixed security over moveable assets, perfected by registration in the Register of Statutory Pledges, eliminates the need to physically transfer possession.
3. Modern Processes: Short-form electronic notifications and streamlined registrations will replace traditional paper-based systems, increasing efficiency and accessibility.

Benefits for Businesses

These changes will unlock new funding opportunities, particularly for smaller businesses like sole traders, who cannot currently grant floating charges. The reforms will also enable automated financing systems, bringing Scotland closer in line with practices in England and beyond. Greater access to finance means greater growth opportunities for businesses in Scotland.

Ease of Creation of Share Pledges

No Need for Transfer of Ownership: Unlike traditional methods such as common law pledges, where possession or control of the shares might have to transfer temporarily to the lender, the statutory pledge allows the pledgor to retain ownership and control of the shares.

Efficient Process: The statutory pledge is created through a written document and registered in the Register of Statutory Pledges, avoiding complex legal structures. Scotland has a longstanding history of difficulties with perfection of share pledges. One of the most common issues being that physical delivery/temporary transfer of the shares can be cumbersome for the running of a company. Businesses can use their shares to secure loans without disrupting their operations or corporate governance.

Codified Remedies: In the event of default, lenders have clear statutory remedies, including selling the shares or appointing a receiver, reducing delays and legal ambiguities.

Efficient Recovery: The Act ensures enforcement is quicker and less costly compared to common law mechanisms. Additionally, with the proposed introduction of the Private Intermittent Securities and Capital Exchange System (PISCES), it may be even easier for lenders to offload private company shares for value to the public.

Consumer Protections

The Act includes safeguards to protect consumers and small businesses. For example, individuals can only grant a Statutory Pledge for business purposes. Protections for third parties acquiring secured assets and for debtors unaware of assignations are also built into the legislation.

The Moveable Transactions (Scotland) Act 2023 marks a significant step forward, making Scotland’s commercial law fit for modern business needs while maintaining robust safeguards. If your business relies on moveable property or rights, this reform could bring new opportunities and efficiencies.

Is this the dawn of greater access to finance for Scottish businesses?

All businesses need money to grow. With the introduction of The Moveable Transactions (Scotland) Act 2023, access to finance and lending should be easier and cheaper for Scottish businesses. Being able to put up movable assets as collateral for the debt obligations should make landing less risky for lenders, and consequently should make obtaining loans cheaper for businesses.

To discuss any of the points raised further, please contact a member of our Corporate law team here.