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Corporate – M&A consequences of Brexit

The transfer of British businesses contemplating a “transfer” to another Member State of the European Union can be achieved through several Community rules that are still in force in the UK until the effective date - now imminent - of the Brexit.

One shall immediately exclude the direct method which consists in transferring the registered office as the directive on the cross-border transfer of a company’s registered office (14th Company Law Directive) has still not been adopted. There are currently, though, as Community rules stand at present - and for a few more weeks or even months if the effective date of Brexit is postponed - two normative mechanisms organising the “transfer” of the registered office or of the assets and liabilities of a company from one Member State to another one, namely (i) incorporating a European company (Council Regulation (EC) n° 2157/2001 of 8 October 2001 on the Statute for a European company) then transferring the registered office of the SE to the host Member State) and (ii) or completing a cross-border merger (Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005).

However, those two Community transfer mechanisms require the implementation of a cumbersome, complex and time-consuming procedure, which is now difficult to reconcile with an imminent and a priori “no-deal” exit of the United Kingdom from the European Union; Indeed, if the hypothesis of a “no-deal Brexit” were to be confirmed, the implementation of such Franco-British restructuring operations could not be based on any Community instrument and would therefore only be possible if it were compatible with the mandatory provisions of each of the two domestic laws concerned.

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