No-Deal Brexit Advice for Business: You Might Want to Leave
Companies based in Britain may need to consider leaving the country or restructuring in order to continue operating after a no-deal Brexit, the government said on Friday.
British businesses undertaking cross-border mergers were advised to complete them before the U.K.’s scheduled departure date of March 29, or face the possibility of remaining EU nations not recognizing them, according to a paper titled "Structuring your business if there’s no Brexit deal," published by the Business Department on Friday.
Previous releases of no-deal papers -- Friday’s is the fourth -- have shown businesses face more red tape in the event of Britain tumbling out of the bloc without an agreement. The latest batch were no different, outlining a series of bureaucratic burdens both EU and British companies operating across the border may face.
In one of the more surprising revelations Friday, public companies with a Societas Europaea designation were even told they may want to quit the country.
Such firms “will no longer be able to be registered in the U.K.,” the government said. “They may also want to consider whether they wish to move their seat of incorporation to another EU member state.”
On cross-border mergers, the government advised companies still going through the process to seek legal advice. About $95 billion in cross-border deals have been announced this year between the U.K. and Europe, according to data compiled by Bloomberg. Among the acquisitions still outstanding is Michael Kors Holdings Ltd.’s 1.8 billion-euro ($2.1 billion) bid for Italian fashion house Gianni Versace SpA
The government said it would try to ensure as little change as possible, however, promising to ensure “that the U.K. 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.”
For SE companies, “the government will put in place a way of automatically converting them into a new U.K. corporate structure so that they will have a clear legal status post exit,” it said.
Other advice in the document includes:
- British citizens may have to meet additional nationality or residency requirements to run businesses in the EU.
- A warning that “there will be changes to the cross-border regimes for U.K. companies operating in the EU.’’
- British companies that operate in the EU may have to meet new requirements to buy real estate and get additional approvals.
- “Restrictions may be more burdensome for branches or representative offices, as opposed to subsidiaries which have their own legal identity and are incorporated in the EU member state concerned,’’ the government said.
- EU companies that have branches in the U.K. will “become subject to the same information and filing requirements as any other third country’s companies’ branches,’’ the government said, adding that extra requirements are “minimal.’’
- U.K. companies that have their main place of business in certain EU nations may no longer have their limited liability status recognized.
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