Certain companies based in Britain may want to consider moving their headquarters abroad in the event of a no-deal Brexit, according to official UK government advice to businesses.
One advice paper titled “Structuring your business if there’s no Brexit deal” advises companies incorporated under EU corporate law that moving to a country that is still a member state may be better for their business.
So-called “societates Europaeae” – European companies – will not be able to operate in the UK and will have to either legally incorporate in another country or convert to a British-only plc.
EU-wide businesses that use the societas Europaea model include major international firms such as Airbus, Allianz, E.ON, SAP, and Schneider Electric.
The societas Europaea system was introduced in 2004 so that companies that operated across Europe could more easily do business across borders – easing operations like mergers.
The government says some of these businesses can convert into British public limited companies, but not all of them.
The government advice states: “Societas Europaea have the option of converting to a UK public limited company (plc) provided they have been registered as a societas Europaea for at least two years or have had two sets of annual accounts approved.
“They may also want to consider whether they wish to move their seat of incorporation to another EU member state. They will need to consider the relevant timeframes for either course of action.”
The announcement came as the Department for Exiting the European Union released its final tranche of 29 technical notices, outlining the government’s preparations for a no-deal scenario.
The documents also outlined how existing trade agreements that deliver 12 per cent of the UK’s total trade could be lost if the UK crashes out of the bloc next March.
It said the trade agreements the UK currently participates in through its membership of the EU, will “cease to apply” in a no-deal scenario, but the government said it would attempt to replicate the deals “as soon as possible thereafter”.
The Food and Drink Federation immediately condemned the “shambolic” prospect of a no-deal exit – warning of higher shop prices and a huge loss of jobs, if tariffs were imposed.
Another technical note, published on Friday, warned that British travellers heading to the EU could also be blocked from using their online streaming services such as Netflix and Spotify if the prime minister fails to achieve a deal with Brussels.
A third document on electricity supply under a no-deal scenario suggested that Northern Ireland could face the threat of electricity blackouts as laws that underpin trade with the Republic of Ireland would disappear.
Negotiators are trying to secure an agreement with Brussels that the current single electricity market would remain intact even if exit talks collapse.
But the government warned that, if the pledge was not secured, customers on both sides of the border could be hit.
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