With the UK due to leave the European Union on 29 March 2019 at the time of writing no Brexit deal has been agreed.
If a deal is agreed, the UK and other EU members have already agreed a “transition” period until 31 December 2020 to allow businesses to prepare for the new post-Brexit rules. During this transition” period the UK will be able to strike its own trade deals, but these won’t come into effect until 1 January 2021. This transition period will only happen if a Brexit deal is reached.
’Deal’ or ‘No Deal’?
The UK government hopes a deal will be reached well before 29 March 2019 and we are all waiting for that cabinet meeting call. The government continue to suggest that a ‘no deal’ Brexit is unlikely given the mutual interests of the UK and the EU, however, the government is preparing for a no-deal scenario and has published a number of notices outlining the implications for certain industries.
One of these notices ‘Structuring your business if there’s no Brexit deal’ is aimed at businesses operating and individuals who operate businesses across the UK and the EU and we have summarised the key points from this notice below:
‘Structuring your business if there’s no Brexit deal’
The government aims to ensure the UK continues to have a functioning framework for companies and that, as far as possible, the same law and rules that are currently in place continue to apply; however, the notice highlights certain changes which are likely:
• EU companies that operate branches in the UK will become subject to the same information and filing requirements as other non-EU companies’ branches.
• EU companies with a branch in the UK that are required to prepare, have audited and disclose accounts by the law of the EEA state where it is incorporated will be required to file certain accounting documents in the UK.
• UK citizens may face restrictions on their ability to own, manage or direct a company registered in the EU (depending on the sector and EU member state in which the company is operating).
• UK businesses that own or run business operations in EU member states are likely to face changes to the law under which they operate (depending on the sector of the business and the member state concerned). This could involve meeting additional requirements in order to acquire real estate and/or requiring additional approvals to operate. Restrictions may be more burdensome for branches or representative offices as opposed to subsidiaries which have their own legal entity.
• UK companies and limited liability partnerships that have their central administration or principal place of business in certain EU member states may no longer have their limited liability recognised. This could mean that the shareholders/members may be personally liable for the debts of the company.
• As the UK will no longer be an EU member state, the remaining EU member states will not be required to give effect to cross-border mergers with a UK company.
• European Economic Interest Groupings, European Public Limited-Liability Companies (or Societas Europaea) will no longer be able to be registered in the UK. Those that remain registered in other EU member states after exit will still be able to trade in the UK as now but, where they have not made alternative arrangements before exit, the government will put in place a way of automatically converting them into a new UK corporate structure (the exact details of this have not been confirmed).
• It is worth noting that, there will be no change in who can be an owner, senior manager or director of a UK company as the UK does not apply any nationality restrictions to owners or managers of UK companies.
For further advice on any of the issues raised in this article please contact Emma Benniston on 01543 431930 or email firstname.lastname@example.org