At our recent event, “Less than 12 months to Brexit: are you ready?” a panel of Simmons & Simmons lawyers from multiple EU jurisdictions explored the different means of establishing entities in EU jurisdictions, and different means of effecting intra-group business transfers. The panel also addressed some of the specific practical requirements applicable to each of the jurisdictions represented.
Timing is key
Timing and transaction management will be critical in navigating the technical differences between each jurisdiction’s requirements. A given jurisdiction might require, for example, a branch to have established a "presence" before registration, translation of key documents, the involvement of notaries or the perfection of asset transfers. As such, firms must ensure that they are accounting for each of the applicable steps, and the timing entailed, in their transition plans.
Reorganisation of EU branches
Organisations should be actively considering whether they seek to reorganise their EU branches. Broadly, they have three options:
- Close their EU branches.
- Leave their EU branches as branches of the now third country UK entity - this will involve engaging with each regulator in each EU jurisdiction, whilst ensuring a certain degree of parity with UK regulation. This requires significant effort and management, and there is currently little regulatory guidance available.
- Move their EU branches into an EU27 hub - organisations will need to consider what each branch’s activities are, and therefore whether the hub’s existing permissions provide sufficient cover for such activities.
Availability of cross-border mergers
Whilst it is not yet clear whether the cross-border merger framework will be available to UK companies during the Brexit transition period, it is likely that it will not. Therefore, they should seek to enact such mergers before departure on 29 March 2019. As a cross-border merger is likely to take a minimum of three months, excluding the prior due diligence required and any regulatory engagement, those interested in cross-border mergers should begin that decision making process in good time. As above, the key message is that time is moving quickly, and organisations need to do the same.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.