Progressing the stalled Scottish Law Commission's Moveable Transactions (Scotland) Bill would signal a clear commitment to prioritising Scotland's economic recovery, and it is hoped this will be taken forward swiftly after next week's Scottish parliamentary elections.
The impracticalities and uncertainty of Scots law on moveable transactions is creating difficulties for, and increasing the costs of, raising finance in respect of Scottish assets. In comparison with their English counterparts, Scottish businesses are finding themselves restricted in the types of fixed security they can grant over their corporeal and incorporeal moveables due to the unsatisfactory and out-of-date nature of Scots law. Creative legal workarounds and mechanisms are available to deploy but a change to the law is desirable and would be timely.
The Bill will modernise Scots law and make access to finance for Scottish businesses easier, cheaper and more efficient.
We have written about the improvements the Bill will bring to facilitate transactions secured over Scottish moveable assets in the vibrant and dynamic arena of funds finance here, and to remove the difficulties posed by the current requirement to transfer legal ownership of shares to the lender in order to create a fixed security over shares in a Scottish company here. We have also highlighted here the benefits of the proposed changes for originators, issuers, arrangers and funders in securitisation and warehouse financing transactions involving Scottish receivables. The benefits of the Bill extend well beyond these areas of business finance to include taking security over intellectual property and invoice discounting.
Scots law in this area is out of date, ill-suited to business needs today, and places Scottish businesses at a disadvantage to their counterparts within the UK and beyond, who benefit from a more modern and business-focused legislative framework. We look forward to seeing the Bill brought into law at the earliest opportunity to help the Scottish economy rebound post Covid.
If you would like to discuss any aspect of the Bill please get in touch with Bruce Stephen or your usual Brodies contact.
