The Scottish Ministers have laid regulations before the Scottish Parliament which will bring the remaining provisions of the Moveable Transactions (Scotland) Act 2023 ("MT(S)A") into force on 1 April 2025. These provisions will make significant reforms to the assignation of and taking security over moveables - including physical assets ranging from vehicles to livestock, intellectual property, and shares - and present an opportunity for those who are prepared to take it.
Benefits of Reform
Following a review, The Scottish Law Commission concluded that the current Scottish law concerning the transfer of moveable property (as opposed to land and buildings) was 'badly outdated, … unduly restrictive, and unfit to meet the needs of modern Scottish commerce'. In response, it made three principal recommendations, each of which was included in the MT(S)A and will come into force on 1 April 2025.
The first is the creation of a new type of security, a 'statutory pledge'. This will make it possible to create security over certain types of moveable property by registration in a new Register, avoiding the need for delivery or transfer of the property. It will substantively increase the ability to raise secured finance in Scotland, including over intellectual property, and is also expected to reduce the burden created by the current law's interaction with the National Security and Investment Act 2021.
The second and third recommendations concerned assignation, or the transfer of rights to payment and claims. Under the Act, it will be possible to complete an assignation by registration of the transfer in a second new Register or by electronic intimation, significantly streamlining the current process.
Preparing for Commencement
The MT(S)A will have a substantial effect on the assignation of and taking security over incorporeal moveables in Scotland. By simplifying and modernising processes, it has the potential to bring significant benefits to lenders, corporate entities, and insolvency practitioners. As the clock to commencement begins to run, there is an opportunity for these parties to ready themselves to take advantage of the new opportunities from 1 April 2025.
In addition to the commencement regulations, the Scottish Ministers have also laid two other sets of MT(S)A regulations before the Scottish Parliament. These provide further detail as to how the new regime will operate, including the rules for the two new registers and prescribed forms relating to the new statutory pledge.
We will continue to monitor developments as we approach the commencement date.
If you would like to discuss anything raised in this blog in more detail, including how you can prepare for commencement, please get in touch with a member of the Banking, Finance, and Restructuring team or your usual Brodies contact.
