European Law Monitor

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newsUnderstanding the legal and practical effects of no deal

The European Commission has published a number of papers which detail the legal and practical effects of no deal on a range of sectors and groups. These are all available at https://ec.europa.eu/info/brexit/brexit-preparedness/preparedness-notices_en

Businesses are very strongly advised to read through these notices so they can understand the effects of no deal on their business. Some of these notices are generic, and will apply to almost every business, for example, those that detail changes to

E-Commerce rules

Network Security

Electronic communications

Use of E-signature

.eu domain names post Brexit

Copyright

Trade marks

Credit rating agencies

Banking services

Insurance

Recognition of professional qualifications

Data protection

Company law

Others are specific to particular sectors, and business owners should scroll through all of them, and read any that they think may impact on their business operations.

The company law is particularly important. This states that:

"UK incorporated companies will be third country companies and therefore not automatically be recognised under Article 54 of the Treaty on the Functioning of the European Union by the Member States (in accordance with the case-law of the Court of Justice). Member States will not be obliged to recognise the legal personality and limited liability of companies, which are incorporated in the United Kingdom, but have the central administration or the principal place of business in the EU-27. UK incorporated companies may be recognised in accordance with each Member State's national law (private international law rules concerning companies and the subsequently applicable substantive company law), or international law treaties. As a consequence, depending on the applicable national or international law rules, such companies might not have a legal standing in the EU and shareholders might be personally liable for the debts of the company.

Branches in EU-27 Member States of United Kingdom incorporated companies will be branches of third country companies and rules relevant to branches of third country companies will apply.

EU law on disclosure, incorporation, capital maintenance and alteration, and cross-border mergers will no longer apply to the United Kingdom. Consequently, stakeholders, including employees, creditors and investors dealing with UK companies will have to rely solely on the national rules of the United Kingdom for adequate safeguards. EU rules on compulsory disclosure of certain company information in the business registers (such as documents and particulars related to instruments of constitution, appointment, termination of office and particulars of persons representing a company, the winding-up of a company or a change of the registered office) will no longer apply.

Businesses affected by these provisions may need to undertake contingency planning to minimise the risks to their business, including, where necessary, setting up company structures within the EU-27 prior to Brexit next year.