The Scottish Ministers recently announced the Moveable Transactions (Scotland) Act 2023 commencement date, alongside a number of other key features that you should be aware of.
Just prior to Christmas, the Scottish Ministers laid a number of important statutory instruments relating to the Moveable Transactions (Scotland) Act 2023 (MTA) before the Scottish Parliament:
- one set of Regulations specifying the commencement date for the MTA;
- one set of Regulations prescribing forms of enforcement notice and correction demand notice;
- one set of Regulations setting out the general rules of the Register of Statutory Pledges and Register of Assignations;
- one set of Regulations making a small number of minor amendments to the MTA; and
- an Order setting out the proposed registration fees and other costs associated with registration in the Register of Statutory Pledges and Register of Assignations.
In this update, we summarise the key points and takeaways arising from those Regulations that you should be aware of.
The most important: commencement date
The key point to be aware of is that the commencement date for the MTA (i.e. the date the Act will go live) has been set as 1 April 2025.
Assuming there are no unforeseen delays, this means that from 1 April parties will be able to grant the new statutory pledge security over their moveable assets, and register statutory pledges and assignations in the new Register of Statutory Pledges/ Register of Assignations.
This date is broadly in line with recent expectations of when the Act would come into force, although as we kick-off 2025 it means we only have three months to get "MTA ready".
Registration fees and other costs
Following extensive consultation by the Scottish Ministers and Registers of Scotland, the draft Order laid for approval by the Scottish Parliament proposes to set the registration fees for the new Register of Statutory Pledges and Register of Assignations as follows:
- £30 to register a statutory pledge document in the Register of Statutory Pledges;
- where the statutory pledge document contains multiple statutory pledges, £5 for each additional statutory pledge; and
- £30 to register an assignation document in the Register of Assignations, with no additional charge for multiple assignations in the same document
We anticipate that, in most cases where a statutory pledge is being taken over multiple asset classes, separate statutory pledges will be granted over these different asset classes within the statutory pledge document.
The reason for this is that under the MTA if a lender does not have sufficient control over all of the assets covered by a statutory pledge, the whole statutory pledge will fail. Having separate statutory pledges guards against any risk of cross-contamination, i.e. the failure of one statutory pledge will not bring down the statutory pledges granted over other assets. This mirrors the approach taken in English debentures or security agreements where separate fixed charges are taken over different classes of assets. As a result, we expect that registration fees in most cases will be in excess of the initial £30 figure.
It is proposed that amendments to statutory pledges will cost £30 per statutory pledge entry and corrections to statutory pledges will cost £10 per statutory pledge entry. It should be noted that these costs relate to each statutory pledge entry, not the security document. If you are seeking to amend or correct multiple statutory pledges contained within a single statutory pledge security document, the fees will increase accordingly.
The Order also sets out that it will cost £25 plus VAT to obtain plain copy documents and £35 plus VAT to obtain official extracts of documents and entries contained in the Register of Assignations and Register of Statutory Pledges.
Search fees will be £3 plus VAT, in line with existing Registers of Scotland digital register search costs.
Content of the Registers
The statutory instruments also contain some slightly less interesting (but no less important!) "under the bonnet" provisions relating to the content of the new Register of Assignations and Register of Statutory Pledges.
In summary:
- Document form: No form of assignation or pledge document is prescribed, providing welcome flexibility.
- Digital registration: There is a presumption in favour of digital registration, which means that paper applications and registration will not be permitted other than in certain limited circumstances.
- Date and time of registration: The new Registers must set out the date and time of acceptance of registration. This will give parties clarity as to the point of perfection of an assignation or statutory pledge.
- No verification: Registers of Scotland are not required to verify whether a user is authorised or entitled to make an application for registration in the Registers, nor whether an assignation or statutory pledge document is legally valid or whether any information submitted is accurate. It is incumbent upon users to ensure validity and accuracy when registering. This is more akin to existing Companies House registration procedure than Land Register of Scotland procedure.
- Certified copies: When submitting documents for registration, users will give a certification that the copy document being submitted is a true copy of the original. This is similar to existing Registers of Scotland and Companies House registration requirements, including the ability to redact certain personal information.
- Basic level of information required: Users
will need to provide a certain basic level of information when
submitting assignations or statutory pledges for registration. Not
all of this information will be publicly available. This will
include:
- name and (for individuals) date of birth;
- company/ identification number;
- registered office or home/ notice address;
- jurisdiction of incorporation;
- business or other trading name; and
- basic particulars of the category of claim being assigned or assets over which the statutory pledge is being granted.
Enforcement notice and correction demand
Those familiar with the MTA will know that, in most cases, creditors will be able to enforce a statutory pledge without having to obtain a court order. The enforcement process will, however, involve serving an enforcement notice on the debtor/ chargor and certain other categories of relevant parties (including other creditors).
The form of enforcement notice has now been prescribed and sets out the information that creditors will need to provide when serving a statutory pledge enforcement notice, namely:
- recipient details and address;
- statutory pledge provider and identification details;
- secured creditor details and address;
- details of the statutory pledge being enforced (in particular the registration number); and
- description of the secured property.
A form of "correction demand notice" has also been prescribed, which sets out the basic level of information that parties requesting correction of the Register of Statutory Pledges must provide.
Minor amendments
A number of minor amendments have also been proposed to the MTA. These are largely uncontroversial and arise from various consultations that have been ongoing since the Act was passed.
These amendments include:
- removal of debt arrangement schemes as a personal insolvency trigger that restricts an assignation or statutory pledge over post-insolvency property; and
- clarification of rules and timings relating to set-off rights and their interaction with assignations and statutory pledges.
What's next?
In terms of next steps, we await confirmation that the regulations have been passed.
We also await confirmation that the UK government will – as anticipated prior to the commencement date of 1 April 2025 – make an Order permitting statutory pledges to be granted over shares in Scottish companies.
Registers of Scotland are currently testing beta versions of the two new Registers and we await the updated, final versions of these Registers with interest.
In the meantime, parties should start to ensure that they are "MTA ready" ahead of the commencement date of 1 April.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
