Brexit – Impact on company and commercial law
19 / 07 / 2016
To be very clear, whilst at this stage the Brexit referendum vote had had a seismic political impact, its contractual effect remains very limited: at this juncture. However, the vote has introduced fresh uncertainty into the contractual landscape.
At the present time and until an exit becomes a reality, the UK remains a fully functioning member of the EU, with all of the rights and obligations which follow under the EU treaties. No pre-emptive action in anticipation of departure can take place without facing action in the European Court of Justice and claims for compensation. Therefore, businesses face the realistic prospect of having to comply with certain new regulations over the coming years in circumstances when the UK government might then repeal such arrangements upon Brexit becoming a reality: a living demonstration of how the current situation is unhelpful to business certainty and the investment climate.
The impact of the referendum vote on commercial contracts is yet to be worked through. It may be prudent to consider whether (if at all) the performance of an obligation under a contract might be frustrated (i.e. is the contractual performance condition inherently linked to the UK being an EU Member State). It is unlikely that the vote is, of itself, sufficient to trigger a material adverse effect clause.
Many of the EU initiatives in the sphere of company law are intended to bring aspects of company law in many members states (such as directors’ rights) closer to the already more developed UK-standard. Furthermore, agendas such as anti-money laundering and transparency of company control arrangements are matters which are led by much broader international initiatives, backed by the OECD and themselves championed by the UK government. It seems that the UK registers of people with significant control regime is becoming the standard by which the implementation in 2017 by EU Member States of the Fourth Anti-Money Laundering Directive is to be measured. So, we neither see significant changes in company law ahead, nor would we consider such changes to be in the interests of UK business.