The impact of Brexit on EU corporate law will be different depending on whether the United Kingdom will be admitted to the European Economic Area (EEA), or will reach an agreement with the European Union, in order to be admitted to the free trade system and benefit from freedom of establishment.
The main issue that could arise in corporate law after Brexit relates to the traditional operations of cross border Mergers & Acquisitions, specifically with respect to the applicability of the Community directives on mergers, transformations and cross-border divisions. Without a new agreement, the above could prevent the automatic recognition of such transaction in each jurisdiction.
In case of corporate groups with companies in both the UK and the EU, this could have a significant impact where the United Kingdom will adopt regulations differing from the Community framework, such that the systems were no longer homogeneous.
Currently in the EEA, a European Company is a type of limited liability company derived from Community law which, once established in any of the EEA countries, is automatically recognised in the other member States without any further formalities. Had been such a company incorporated in the United Kingdom, following the exit of UK from the EU, it would no longer be recognised in the rest of the EEA countries and would therefore need to be transferred or transformed.
In the equity capital markets, the role of the London Stock Exchange, which currently has a prominent role in the international financial instruments market, should be reconsidered, specifically with respect to any regulatory changes arising as a result of Brexit.
If, in the future, any EU provisions modifying the principle directives in the capital market sector (the Prospectus Directive, Directive on Takeover Bids, Directive on Transparency and the Market Abuse Directive) and the rules on passporting of products, the English financial instruments may no longer be recognised in the European Union’s regulatory system resulting in greater complexity in the preparation and circulation of documents and products.
You can consult and/or download the full version of the Brexit dossier here.