Electronic transfers

Mobile transactions: five things to know about the new transfer rules

In Scotland, claims (e.g. right to payment) are currently transferred by assignment followed by notice (i.e. notification) of the transfer to the party who is bound to perform the obligation (by example make a payment).

The current law is riddled with uncertainties, in particular on the validity of the denunciation, the competence of the transfer under a suspensive condition (to allow the postponement of the transfer to a certain date or the occurrence of a specific event) and the question of knowing if a partial assignment the assignment (when only some of the receivables are transferred) is effective.

The Securities Transactions Bill clarifies the uncertainty surrounding assignments and creates an additional new method of transferring claims by assignment followed by registration in a new register of assignments.

Key things to know about postings under the bill include:

  • Future claims and groups of claims can be assigned: the claim(s) must be identified in the assignment document, but the claim(s) need not be owned by the assignor (and need not exist) at the time the assignment document is signed. The receivable(s) will not be transferred until the assignor owns the receivable and the assignment has been suggested or registered.
  • Receivables may be assigned subject to conditions: provided that the condition (for example, a date reached, or the occurrence of a particular event) is specified in the assignment document (and that a reference to another document to this effect is sufficient), a claim may be assigned subject to conditions. The claim will be transferred once the condition is met and the assignment has either been suggested or registered.
  • Receivables may be assigned in part: pecuniary claims may be assigned in part or in full. Since partial assignments can be onerous for debtors (instead of having to pay one person, they have to pay two or more), the assignor may have to pay the debtor any additional costs resulting from the partial rather than full assignment. of the debt. .
  • Notices may be electronic and addressed to a single co-debtor: notifications can be made by email and the required information can be provided to the debtor via an electronic link to a website or portal. If there are co-debtors, it is sufficient to notify only one of them, but any debtor or co-debtor who has paid in good faith the person whom he last knew was the holder of the claim is discharged from the claim on the measure paid.
  • Assignments of receivables under financial guarantee contracts are excluded: for example, an assignment as security by a credit card company of sums owed by its customers would not benefit from the changes made by the bill. These issues are expected to be dealt with by secondary legislation passed by the UK Government with the effect that the assignment provisions of the Bill will also apply to the assignment of such receivables.

The practical benefits of these changes are that businesses will be able to transfer receivables with greater efficiency and without the need for additional transfers or additional collateral. Transactions across a wide range of sectors, including asset finance, bill finance and fund finance spaces, as well as securitization transactions involving Scottish claims which are not secured by land, will be simplified and more streamlined, which will ultimately reduce costs and open up financing opportunities. to businesses.