This year, the UK and Scotland have developed two new separate pieces of legislation that, respectively, aim to crack down on fraudulent business activity, and bolster businesses' ability to raise finance.

Both are expected to come into force in 2024.

What are these acts, and what do they mean in practice for businesses?

  • The Economic Crime and Corporate Transparency Act 2023 (ECCTA) aims to improve transparency and crack down on economic crime by imposing new obligations on companies, LLPs and limited partnerships to provide more, quality information to Companies House; and
  • The Moveable Transactions (Scotland) Act 2023 (MTA) introduces a new legal framework for the transfer of rights in Scotland, and facilitates businesses' use of moveable assets – e.g. inventory, machinery, livestock and IP - as collateral for raising secured finance.

The ECCTA – what changes will it bring?

1. New ID and email requirements

ID verification requirements for new and existing directors and persons with significant control will be introduced. Businesses will also have to provide a registered email address to Companies House and more information about shareholders in their Register of Members.

2. Company incorporation

The process for incorporating a company is being tightened, with new requirements for companies to confirm they have a lawful purpose. The directors will have to confirm they haven't been disqualified as well as have their ID verified. The fee for incorporation is also likely to increase.

3. Failure to prevent fraud offence

A new offence will make companies over a certain size criminally liable where they have failed to prevent fraud. Being unaware won't be an accepted defence, so organisations will need to implement training and procedures to ensure compliance.

4. Limited partnership reforms

A wide range of reforms will be introduced for UK limited partnerships, including Scottish ones. These include the requirement to provide Companies House with specific information about partners and a registered email address and office address; new powers for HMRC to demand audited accounts from a limited partnership; and new restrictions on a disqualified director of a UK company from acting as the general partner of a UK LP.

The MTA – what changes will it bring?

1. Financing and growth opportunities

One of the most notable impacts of the MTA is the extended secured finance options for businesses seeking to raise finance. Secured finance should become easier to obtain as businesses will be able to grant fixed security over their moveable assets without some of the challenges that currently exist. A modernised regime for taking fixed security over moveable assets will enable lenders to take a security package that gives a better position on insolvency, which ought to lead to cheaper finance for businesses. These factors could be particularly beneficial for businesses that cannot grant floating charges, as well as start-ups and SMEs looking for capital to expand their operations.

2. Streamlined administration

The ability to transfer rights in relation to moveable assets using a straightforward, online process, should reduce the administrative burdens and the associated costs for companies when obtaining finance.

3. Efficient asset use

The MTA allows companies to make more efficient use of their moveable assets. Businesses can use the modernised regime to leverage more easily their moveable assets for secured financing while still using them in day-to-day operations. This is particularly beneficial to businesses with high value moveable assets that are retained for long periods of time – e.g. whisky distilleries. Start-ups with few rights and assets (other than IP rights) will also benefit as they will be able to leverage the rights for financing as they build up their businesses.

4. Risk management

The clarification and modernisation that the MTA brings security law in respect of moveable assets in Scotland is expected to enhance lender credit and risk assessment.

Should I act now?

Although the MTA and ECCTA are not yet fully in force – and some components like the ID verification system are likely to take some time to roll out - businesses can take some actions now to be better prepared for 2024:

  • Collate any additional information needed, e.g. email address, shareholders' full names and addresses
  • Alert directors and Persons with Significant Control to the ID verification requirements
  • Take advice on a fraud prevention policy and other procedures including training for staff
  • Stay informed on the MTA provisions and leverage any benefits to your business' advantage.


Derek Stroud