101 UK Brexit Notes

Connemara Programme October 16 2018 pg. 176 Structuring your business if there’s no Brexit deal Purpose This notice explains the implications for businesses which are legal entities operating across the UK-EU border, or who have taken the form of a European specific entity, in the unlikely event that the UK leaves the EU in March 2019 with no agreement in place. For the purpose of this notice, ‘UK company’ means a company incorporated in the UK and includes a subsidiary incorporated in the UK regardless of the nationality of its parent but does not include a UK branch of a company incorporated elsewhere. An ‘EU company’ means a company incorporated in the EU regardless of the nationality of its parent but does not include an EU branch of a company incorporated elsewhere. This notice covers: cross border business operations, European specific entities. Before 29 March 2019 The UK currently follows the EU rules and regulations that fall under the area of company law, which set out how companies and other legal entities operate within the Single Market, how they register and how they operate across country borders in the EU. This is reflected in UK law mainly through the Companies Act 2006 and regulations made under that Act. For other types of legal entities which have their own specific legislation, this generally mirrors the legislation for companies (albeit with modifications) and therefore much of this notice will be relevant to these entities also. However, this notice is expressed in terms of the effect for companies as this is the most commonly used corporate form. EU law also provides frameworks for certain EU specific entities to form and operate: European Economic Interest Groupings, European Public Limited-Liability Companies (or Societas Europaea), and European Groupings of Territorial Cooperation. After March 2019 if there’s no deal The government will ensure that the UK continues to have a functioning regulatory framework for companies and that, as far as possible, the same laws and rules that are currently in place continue to apply. This will be done by using the powers in the EU Withdrawal Act 2018 to correct deficiencies in our statute book arising from our exit from the EU. The UK government will continue to work with the Scottish Government, Welsh Government and the Northern Ireland Civil Service, to ensure the future company law regime works across the UK. Cross-border business operations For companies incorporated in countries outside of the EU, operating by way of branches within the UK, the regime applying to them will remain substantially the same. Such companies are currently third country businesses in relation to the EU, and that will remain the case. In the UK, such companies are currently subject to the overseas companies regime and the requirements relating to them as non-EU companies will not change. The overseas companies regime is in the Overseas Companies Regulations 2009, SI 2009/1801. However, there will be changes to the cross-border regimes for UK companies operating in the EU, because the UK will no longer be an EU member state. These companies will become third country businesses in relation to the EU. European specific entities The European Economic Interest Groupings and European Public Limited-Liability Companies (or Societas Europaea) frameworks require that the entities are registered within an EU member state. On exit day the UK will no longer be an EU member state and the consequences of this are set out in the sections below. Implications Cross-border business operations There will be no change in who can be an owner, senior manager or director of a UK company, as the UK doesn’t apply any nationality restrictions to owners or managers of UK companies. EU companies that operate branches in the UK are currently subject to the overseas companies regime, but the requirements applicable to them will change. They will become subject to the same information and filing requirements as any other third country’s companies’ branches. However, those additional requirements are minimal. Guidance on the current requirements can be found here. An EU company with a branch in the UK that is required by its parent law to prepare, have audited and disclose accounts will be required to file in the UK accounting documents which will include the accounts, any annual report of the directors, any report of the auditors on the accounts, and any report of the auditors on the directors’ report. Parent law in this context will be the law of the EEA state where the company is incorporated. An EU company with a branch in the UK which does not meet this description will, after exit day, have to comply with the provisions of Part 15 of the Companies Act 2006 that have been applied (with modifications) to overseas companies by the Overseas Companies Regulations 2009. 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. This could involve meeting additional requirements on the nationality or residency of individuals allowed to act as senior managers or directors and/or limits on the amount of equity that can be held by non-nationals. Further information on the requirements in EU member states can be found via the European e-