Scotland: company law

Updated: Aug 20, 2021

Generally speaking, Scottish Company Law and English Company Law correspond. There are, however, differences in terminology. For instance, the word ‘interdict’ is used instead of ‘injunction’, ‘pledge’ or ‘bond and disposition in security’ instead of ‘mortgage’, ‘heritable property’ instead of ‘real property’, etc. Again, the Edinburgh Gazette takes the place of the London gazette in issuing official notices. Other differences in Scotland arising from both common law and statute include: (1) Companies which have their registered offices in Scotland are responsible to the Registrar of Companies in Scotland, ‘[ who is quite distinct from the Registrar of Companies in England and Wales. (2) The register of members may contain notice of a trust. The trustee may be the registered holder, but the fact that he is a trustee only can be indicated as can the name of the holder of the beneficial interest. However, any trustee so registered is personally liable for amounts due on the shares. (3) There is no such thing as a notice in lieu of distringas. (4) Shares cannot be pledged as security either with or without a blank transfer. They must be transferred with a provision for retransfer when the debt is settled. (5) The Limitation Act 1939 does not apply to Scotland but certain debts, e.g. unclaimed dividends, become barred by the long negative prescription after twenty years. (6) Although winding-up rules are similar to those in England and Wales there is no Official Receiver for Scotland, though a person may be appointed Official Liquidator in his place. (7) Until relatively recently the fact that movable property could not in Scottish law be pledged to secure a debt meant that Scottish companies were unable to issue debentures carrying a floating charge. The Companies (Floating Charges and Receivers) (Scotland) Act 1972 gave Scottish companies power to issue debentures secured on a floating charge and gave the debenture holders powers similar to those of their counterparts in England and Wales to appoint a Receiver if their security was threatened.

Reference: The Penguin Business Dictionary , 3rd edt.

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James Knight
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James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.