Shonagh Brown

Historically, this area of law has been unduly restrictive and cumbersome, regarded as being ill-suited to the needs of modern Scottish commerce. The MTSA takes steps to reform the law in relation to taking security over moveable property and to codify and reform the law in Scotland in relation to assignations, both “absolute” and “in security”.

The MTSA introduces two new publicly searchable statutory registers that will be maintained by the keeper of the Registers of Scotland: the Register of Assignations and the Register of Statutory Pledges.

Registration of an assignation in the Register of Assignations will be an alternative to intimation, meaning an assignation (either absolute or in security) will be able to be “created” by registration rather than by intimation.

The MTSA also creates a new form of security known as the “statutory pledge” which can secure corporeal moveables – for example, plant and machinery – and certain incorporeal moveables, such as intellectual property rights and (following the Moveable Transactions (Scotland) Act 2023 (Financial Collateral Arrangements and Financial Instruments) (Consequential Provisions and Modifications) Order 2025 being passed on 6 March) shares in a Scottish company. Registration of the statutory pledge will negate the requirement to transfer possession of the pledged asset to the creditor, and it can therefore be described as a non-possessory pledge.

The inclusion of shares within the framework of the MTSA will be welcomed by businesses and creditors alike, given that it will remove the need to transfer title to the shares and the associated issues which can currently arise under the National Security and Investment Act 2021.

These options to be introduced by the MTSA are an alternative to, and not a replacement of, the existing common law regime.

However, lenders, and in particular anyone involved in deal structuring, on both originations and refinancings, should be aware of the broader range of assets, including future assets, over which it will now be possible to obtain fixed security, and consider what security package would be best suited to their transactions going forward once the MTSA comes into force.

Lenders will also need to consider the practical implications of the use of the new registers, including being set up to respond to any “requests for information” under the MTSA (which can include a request by an “entitled person” to confirm whether a particular asset is caught by the registered security). Lenders will also need to manage their internal consent processes to ensure that, where assets are secured on a transaction by way of statutory pledge, any consent to a transfer of such asset is given in accordance with Section 51 of the MTSA (and is not a preordained consent in the finance documents) to avoid the risk of a statutory pledge being extinguished (“torpedoed”) in accordance with Section 52 of the MTSA.

Shonagh Brown is a legal director at Pinsent Masons