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.