The Moveable Transactions (Scotland) Act 2023 ("the Act"), which came into force on 1 April 2025, marks an important shift in Scots law. Rooted in over a decade of legal reform efforts, the Act modernises how businesses can use moveable property—everything from tractors and livestock to whisky barrels and intellectual property—as security. For rural enterprises and farming businesses, this legislation has the potential to unlock additional access to finance by modernising how loans can be secured, if the lending sector embraces the potential of the new law.
The Problem: Legal Barriers
Before the Act, it was difficult for Scottish rural businesses to use moveable assets for securing finance. For example, physical assets (like machinery, vehicles and livestock) could only be pledged if the lender physically took possession of the asset which made it impractical for businesses that rely on daily use of those assets. Similarly, non-physical assets such as invoices and intellectual property could not be used as security for obtaining finance.
Incorporeal assets (like debts or intellectual property) required formal notification to third parties, which was cumbersome and often commercially sensitive and future assets could not be used which often impacted forward-looking investment.
These constraints presented a major barrier for Scottish rural businesses which often hold significant value in physical and intangible assets but currently cannot use these as security for finance.
The Solution: A Modern Legal Framework and Registers
The new legislation introduces major innovations that could be used by lenders in financing moveable assets, underpinned by the creation of two new public registers maintained by Registers of Scotland (the Statutory Pledge Register and the Register of Assignations). The purpose of the new registers is to ensure transparency, allowing potential creditors to check for existing claims on an asset.
Why it Matters to Rural Businesses
The new legislation could help to :
- Unlock Working Capital: Rural businesses may have the ability to access a wider range of short-term finance using their assets such as livestock, stored grain, machinery, and other movable assets as security to a lender without parting with them;
- Support and Secure Investment: Rural businesses often require to invest in new equipment or diversify and can use new or existing equipment or produce as a tool to secure finance.
- Improved Invoice Financing: As with any business, rural businesses can face delays in receiving payments, which can be an issue particularly for smaller enterprises. The new assignation process allows farmers the ability to assign invoices to lenders so lenders will be entitled to the sums due under the invoice once paid.
- Level Playing Field: The reforms bring Scotland more in line with England and Wales and international standards, thus ensuring Scottish rural businesses have access to the same types of asset-based lending.
Challenges and Considerations
While the Act has been widely welcomed, practical challenges remain. Financial institutions who are not involved in these types of lending models will require to adapt their systems to register statutory pledges and assignations efficiently.
For rural businesses who secure finance against moveable assets which are recordable in the Register of Statutory Pledges or Register of Assignations, there may still be costs involved in setting up new securities over these types of interests and arranging for those interests to be recorded within the correct register.
Conclusion
The Moveable Transactions (Scotland) Act 2023 could, if embraced by lenders, unlock another way of securing finance which may be suited to rural businesses who often hold a number of valuable moveable assets such as vehicles and machinery. As awareness grows and the new registers become embedded in practice, the Act could potentially play a pivotal role in enhancing the ability for rural businesses to obtain finance to support sustainable growth, and represents a long-overdue modernisation of Scottish commercial practice.
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