As mergers and acquisitions activity tends to be more strategic than tactical, we are anticipating that most transactional plans will remain in place, providing funders keep their nerve. The main issue will be maintaining market confidence; although it has been considerably shaken, we believe that it should return to near normal levels because of the length of time it will take to negotiate our exit from the EU.
In terms of legislation, we suspect that any changes to those aspects of company law derived from EC Directives (such as the accountancy rules, disclosure rules, directors’ duties and shareholder rights) will not be a priority for the Government and that mergers and acquisitions law is not likely to be affected. Although much employment legislation is derived from EU regulation, any attempts to unravel workers’ rights would be deemed politically unacceptable.
Looking to the future, areas which may be lost include listed company ‘passporting’ (where the UK Listing Authority is the approval body for UK plcs wanting to list on European stock exchanges); the European Insolvency Directive; and the pan-European SE (European public company) although matters involving the latter are relatively uncommon in the UK. Other matters which may be affected are the ability to transfer companies within Europe; double taxation (although a bilateral treaty is likely to deal with this); and the enforcement of commercial judgments which again could be dealt with by bilateral treaties.
Business as usual
We have to remember that the UK remains a member of the EU until we formally exit the organisation which means ‘business as usual’ for an unspecified period of at least two years. For instance, it appears that the new EU Data Protection Regulations, due to be introduced in 2018, will still be adopted.
Although the uncertainty created by this unprecedented situation is the greatest danger to the market, we are confident that the lengthy timescale for negotiations is such that most businesses will adjust to these new conditions and be able to adhere to their growth plans. We will keep a close eye on developments; in the meantime, please contact a member of our corporate team if you have any concerns or questions about any action you should, or should not, take.