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Reform of moveable transactions law 20/12/2017 The Scottish Law Commission has published a Report recommending reform of moveable transactions law in Scotland.

Reform of moveable transactions law

The Scottish Law Commission has published a Report recommending reform of moveable transactions law in Scotland. It is the culmination of one of the most complex projects ever undertaken by the Commission.

Moveable transactions law enables businesses and individuals to use their moveable property (i.e. property other than land and buildings) to access finance, but current Scottish law in this area is badly outdated, unclear, and unduly restrictive. It inhibits economic growth by making it harder for entrepreneurs to get the finance they need.

For example, Scotland is home to many intellectual property-rich enterprises in the food and drink, oil and gas, renewable technologies, IT, life sciences and creative sectors. It is difficult under the current law for such enterprises to raise working capital by using their intellectual property as security for a loan. 

Reform is long overdue. The Commission has carried out extensive research. It has consulted widely, and its proposed reforms have attracted strong support. It's main recommendations are:

  • Claims to payment can transfer by registration of the assignation in a new Register of Assignations,
  • Such claims can continue to transfer by intimation of an assignation, but now with clear modern rules on electronic intimation, and
  • A new security (a “statutory pledge”) can be created by registration of the pledge in a new Register of Statutory Pledges, without the need for delivery or transfer of the asset.

“Modern and effective moveable transactions laws have been shown internationally to have significant economic benefits for countries which adopt them,” said Dr Andrew Steven, who has been the lead Commissioner on this project. “Current Scottish law here is woefully inadequate. It rests on Victorian legislation and disparate court decisions. There are many gaps and uncertainties. Scotland has fallen considerably behind modern international standards in this area. Our recommendations provide for a new statutory scheme fit for the needs of business in Scotland in the twenty-first century.”

The Report is available here.


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