Clifford Chance – Following the UK’s vote to leave the European Union, multinationals face a range of challenges. At two recent Clifford Chance seminars in London, our experts shared their views on what Brexit means for multinationals outside the financial services sector, focusing on the business and legal impact.
There is still considerable uncertainty as to how the process of the UK leaving the EU will play out and the impact varies considerably from one business to another. Some companies are only marginally affected but for others the changes will be significant. Mark Poulton, Head of Corporate, London said:
“We have been discussing the possibility of Brexit with our clients for many months now. In the run up to the referendum some had taken steps to prepare, others have very much taken a wait and see approach. But now we know the outcome of the referendum the journey starts for real. I think it is going to be a marathon and pace will be important.” At our recent seminars, our experts answered some of the questions our multinational clients outside the financial services sector are focussing on.
What happens now?
While the market has been volatile, nothing has changed legally as a result of the vote to leave the EU. The UK remains part of the EU and the referendum has had no effect as a matter of UK law, UK constitutional law or EU law.
The serving of an Article 50 notice by the British Government to the European Council will start a two year timetable to negotiate a withdrawal agreement.
The UK then leaves the EU at the point when that agreement comes into effect or, if earlier, the date falling two years after Article 50 is triggered (unless extended with the approval of all EU Member States).
it is unrealistic to expect the UK to trigger Article 50 before it understands what is politically achievable.
Dan Neidle, International Tax Partner, and Brexit Specialist, said that from a UK perspective and in the interests of providing at least a measure of stability for business, it seems to make sense to delay the start of the two year timetable for as long as possible – or at least until the UK and the EU have had time to set their negotiating position and their priorities.
There now seems to be a general understanding that only the UK can control the timing of the issuing of the notice, and that the UK will need time for its new political leadership to bed down and agree on what it wants to achieve. There initially seemed to be some conflict over the timing, with France, Germany and the EU institutions suggesting they wouldn’t commence negotiations until Article 50 is triggered.
“This position seems to have been softened, with a recognition that it is unrealistic to expect the UK to trigger Article 50 before it understands what is politically achievable. Hence we now expect Article 50 to be triggered no earlier than January 2017 (and possibly some time later), but with informal discussions between the UK and other Member States in the Autumn”, Neidle said
Mark Poulton is Head of Clifford Chance’s London Corporate Practice with over 25 years’ experience in corporate mergers and demergers, acquisitions and disposals, restructurings, structured financings and joint ventures, particularly in the energy, TMT and real estate sectors.