Notwithstanding the deferral of "Brexit day" from 31st October 2019 to 31st January 2020, the possibility of the UK leaving the EU without a" deal" remains a very live issue.
With this in mind, the publication by BEIS (the UK Government Department for Business, Energy and Industrial Strategy) on 25th October 2019 of its guidance paper , "EU Exit and Company Law", is very timely. Its objective is to identify in one place "legislative and practical changes to the UK Company Law framework as result of Brexit in a No Deal scenario".
The guidance includes sections on the following topics:-
- Filing and disclosure changes;
- Cross-border mergers;
- So-called "Societates Europeae" ( SEs) and European Economic Interest Groupings (EEIGs);
- Removal of benefits for certain UK companies only listed on an EEA market;
- Shareholder approval of political donations;
- Accounting requirements;
- Audit committees; and
- Miscellaneous other amendments to the UK company law framework
The guidance paper, which runs to 26 pages, is not comprehensive but is a good summary of the relevant UK company law issues and a model of clarity in a complex area of law. Appropriate advice on EU law issues or local law issues within EU member states would need to be sought separately.
The guidance paper bases much of its analysis by reference to the Companies, Limited Liability Partnerships and Partnership ( Amendment etc.) ( EU Exit) Regulations 2019 ( SI 2019/348) - a "Brexit" regulation made under the EU ( Withdrawal) Act 2018 and due to come into force on Brexit day ( whenever that should be) , particularly in a "no deal" scenario situation.
Perhaps the most concerning issue of company law arising from a no deal Brexit is one that is not dealt with in BEIS's practical guide and that is the possibility that certain EU member states may not recognise the limited liability of certain English company law vehicles in circumstances particularly where the company is managed from the EU member state concerned and/ or has an active branch in that EU member state . This is a matter that should be carefully analysed as part of an overall review of company law issues which should be carried in the context of a possible "no deal" Brexit , particularly where the company has operations both in the UK and EU.
Whoever said that life was easy? The BEIS guide does, however, help in making an understanding of the UK company law issues affected by Brexit a little easier.