Ahead of the much-anticipated implementation of the Moveable Transactions (Scotland) Act 2023 on 1 April 2025, the UK Parliament has passed an additional Order which was necessary to include company shares, other financial instruments and financial collateral arrangements within the scope of the new security regime.
The Moveable Transactions (Scotland) Act 2023 (Financial Collateral Arrangements and Financial Instruments) (Consequential Provisions and Modifications) Order 2025 now facilitates (a) the grant of statutory pledges over financial instruments, including shares in Scottish companies, bonds and other financial instruments; and (b) statutory assignations of claims extending to other financial collateral, potentially including claims in relation to bank accounts and other cash deposits held in Scotland.
Statutory pledges being extended to cover shares in Scottish companies is expected to be particularly celebrated by law firms, lenders and borrowers alike as it finally allows for an alternative form of fixed security over Scottish company shares, in contrast to the current regime whereby transfer to the secured creditor (or its nominee) is a mandatory requirement of valid security; this briefing discusses how this will work in practice.
