New Scottish moveable transactions regime to go live on 1 April

After many years in the making, the new Scottish moveable transactions regime under the Moveable Transactions (Scotland) Act 2023 goes live in less than three months.

The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

The relevant statutory instruments were laid in the Scottish Parliament just before Christmas to bring the new rules for assignations of claims and statutory pledges over tangible moveables and intellectual property into effect on 1 April, along with the new online Register of Assignations and Register of Statutory Pledges – the beta versions of which were subject to initial external testing in December.

Meanwhile, down south, a further statutory instrument extending the new assignation regime to bank accounts and other claims falling within the financial collateral regime and extending the new statutory pledge regime to shares and other financial instruments is also anticipated to be laid before the Westminster Parliament shortly. These measures are expected to be effective from 1 April as well.

The new regimes will revolutionise fixed security over Scottish shares, intellectual property, equipment and other tangible moveables and assignation of book debts, rents, bank accounts, contractual rights and various other obligations outright and by way of security. It is not intended to describe the changes again here in detail (see Moveable Transactions Reform in Scotland | Shepherd and Wedderburn). Instead, we simply note that transactions that are currently complex to the point of being unfeasible will become straightforward and capable of swift and efficient execution by uploading simple documents to the new online registers and using modernised versions of current processes.

One of the new Scottish statutory instruments sets out the rules for the new registers, and another sets out the charges for using and searching them. The process for using the new registers is straightforward and involves filling in some basic details online in relation to a given assignation or pledge document, indicating the categories of assets being assigned or pledged and uploading the assignation or pledge document. This will not be dissimilar to charge registration at Companies House, but with the expectation that registration or rejection will take place in a very swift automated manner. The form of assignation or pledge document to be used is not prescribed and can be electronic, facilitating flexibility and efficient systems.

The consultation on fees for registration last year was controversial, as many stakeholders, including UK Finance, argued the levels originally proposed were too high to encourage usage.  While the reduced £30 per assignation and pledge document uploaded to be charged (plus £5 per additional pledge contained in the same pledge document) is still higher than some comparable systems internationally and charge registration at Companies House, it is less likely to deter use of the new registers than the original proposals. Searching (by name of assignor or pledgor) will cost £3 and use a system similar to the ScotLis system familiar to lawyers using other Scottish registers. It would appear that it will be necessary to pay for downloading (but not examining) assignation and pledge documents uploaded – again more expensive than Companies House, but likely to be workable in most circumstances.

The reforms have been structured such that existing processes for taking assignations and fixed security (or existing workarounds for current difficulties) can largely still be used. It is, however, anticipated that the reforms will permit some businesses to access some funding not currently available to them and that some funders not currently operating in Scotland or in certain parts of the Scottish market will see opportunities to do so. In addition, the improved security available using new assignations and pledges will likely provide some pricing and other benefits.

For some time now, some in the market have been preparing for the new regimes to come into effect, but the increased certainty from the implementation date and detailed rules will encourage more to move from generic further assurance provisions in documents to cover the new regimes to developing new documents and systems to be more fully ready to take advantage of the new regimes when they come into force.