310 SECRETARIAL PRACTICE
According to the common law of Scotland no security can
be effectively created over moveables or personal property
vetentd possesstone. This general rule has been to some
extent modified by statute, but broadly speaking the law
remains as stated. In order, therefore, to create an effective
charge or security of such property, delivery, either express
or constructive, must have been given to the creditor and
retained by him. In the case of moveables, such as stock-
in-trade, etc., actual delivery or transfer to the creditor—an
operation, however, which, consistently with the proper
carrying on of business, is usually found to be more or less
impracticable—leaves no room for doubt, but the same
result may be achieved constructively, e.g. by the transfer of
goods in store from the name of the owner and borrower into
that of the lender. Similarly, if obligations are assigned,
the assignment must be intimated to the obligant; e.g. the
assignment of uncalled capital by intimation to the share-
holders who are liable.

One result of the rule referred to is to render the existence
of the floating charge known to English law impossible
in the case of a company registered in Scotland over Scottish
assets [see Clark v. West Calder Oil Company (1882), 9 R.
1017; Ballachulish Slate Quarries v. Menzies (1908), 45
S.L.R. 667].

Accordingly, in Scotland, debentures issued under the
Companies Acts are confined to three classes: (1) naked
debentures, which are no more than a personal obligation
by the company for repayment of money advanced on loan;
(2) debentures secured over moveable or personal rights or
property by actual or constructive delivery or transfer to the
lenders or trustees for lenders; and (3) mortgage debentures
secured over heritable or real property.

Naked As to (1), naked debentures, the lender is, subject to the
Debentures. variation in procedure in the matter of enforcing recovery,
practically in the same position as a lender under a naked
debenture of an English company. The rights of debentures
of this class are now not infrequently regulated by the terms
of a separate deed of trust, under which trustees are appointed,
instead of being expressed in the debenture itself. =~ The
advantages of such an arrangement in case of default lie
chiefly in the convenience by which the claims of the
debenture holders in case of liquidation are advanced and
controlled by the trustees in the general interest in terms
of the provisions of the trust deed. But the existence of
such trusts, of which there are now many, does not carry
the actual richts of the debenture holders as regards security

Floating
Charge.