Brexit related reorganisations and transitions

Transcription

1 Brexit related reorganisations and transitions Isabella Roberts David Parkes Khasruz Zaman FI & AMIF Autumn Legal Update 2017

2 Introduction As a result of Brexit: EU banks/other regulated entities passporting into the UK will likely need to separate out UK business into a UK entity UK and other banks/other regulated entities using their FCA/PRA regulated status to passport into the EU from UK headquarters will need to set up an entity registered in an EU-27 state, and transfer into it the relevant business 1 / B_LIVE_EMEA1: v1

3 Overview Three key options Business Transfers Statutory Transfers (under Part VII of FSMA) Cross Border Mergers 2 / B_LIVE_EMEA1: v1

4 Options: Business Transfer Can be used to transfer all or part of a business in any jurisdiction or jurisdictions Business Transfer Agreement (BTA) (plus local law contracts?) Due diligence Perfection of transfer of individual assets and liabilities, and contracts/rights: specific formalities e.g. transfer of land in writing, assignments of leases requiring landlord consent 3 / B_LIVE_EMEA1: v1

5 Options: Business Transfer (cont.) Perfection of transfer of individual assets and liabilities, and contracts/rights: contract transfers consent needed? benefit vs burden novation / novation by conduct timing / number of counterparties customers likely to withhold consent or renegotiate? Employees in Europe, automatically transfer with the business (UK TUPE) 4 / B_LIVE_EMEA1: v1

6 Business transfer structure Seller(s) (any jurisdiction) BTA (and transfer documents) Transfer of contracts and assets Buyer(s) (any jurisdiction) 5 / B_LIVE_EMEA1: v1

7 Business transfers pros and cons Pros: - only the assets and liabilities selected will transfer (unlike share sale) - private process (in most jurisdictions) - can (but does not have to) involve more than one jurisdiction Cons: no universal succession each asset needs to be dealt with separately 6 / B_LIVE_EMEA1: v1

8 Options: Statutory transfers under Part VII of FSMA Types: - banking business transfers must include deposit taking - banking reforms ring-fencing transfer schemes - insurance business transfer schemes Timing: months for straightforward transfers months for more complex schemes Pros: - transfer by operation of law no need for individual consents - scope to transfer other assets / business Cons: - complexity: publicity, regulatory support and Court approval - possibility of objections by persons adversely affected - not generally enforceable in overseas jurisdictions 7 / B_LIVE_EMEA1: v1

9 Part VII banking business transfer indicative timetable Due diligence and planning (T - 6/12 months) File claim form, application notice and first witness statement Preliminary Court Hearing (directions hearing) - file second witness statement - preliminary order made (T 3 months) Publish Gazette and newspaper notices Make scheme available to public (T 25 days) Final Court Hearing - file third witness statement - order made - inform PRA/FCA and any third parties Notify customers and counterparties (T 6 weeks at latest) Effective Date (T + x) 6 9 months Initial discussions with PRA/ FCA Finalise: - Scheme document - Court documents - Statement - Witness statements - Press notices and agree with PRA/FCA Copies of court application notice, statement of terms and press notices to PRA FCA/PRA to confirm whether or not will attend court hearing Send two copies of Order to PRA/FCA (by T + 10) 8 / B_LIVE_EMEA1: v1

10 Options: Cross-border merger Can be used to merger two or more entities incorporated in different EEA States NB EasyNet case shells/dormant entities Assets / liabilities / contracts etc transfer by operation of law due diligence post-transaction notifications and updating of public registers permits do not transfer Any non-transferring assets must first be removed Employees automatically transfer 9 / B_LIVE_EMEA1: v1

11 Options: Cross-border merger (cont.) Court/notarial process with set timelines and formalities merger plan and explanatory statement display of documents employee consultations shareholder approval court/notarial final approval transferee entity struck-off automatically NB branch transfers require new branches to be set up (transferee entity) 10 / B_LIVE_EMEA1: v1

12 Options: Cross-border merger key stages First court hearing Merger Plan and Merger Report sent to employees and shareholders 2 months - Merger Plan and Merger Report available for inspection 1 month - Shareholder resolutions Second court hearing Issue of pre-merger certificates 6 month window from pre-merger certificates final approval 7 days striking off 11 / B_LIVE_EMEA1: v1

13 Cross border merger structure Before Transferor (disappearing entity) Transferee After Transferee (surviving entity) Holding transferee and transferor businesses 12 / B_LIVE_EMEA1: v1

14 Cross border mergers pros and cons Pros: - universal succession - certain process Cons: - at least two (real) EU member state entities required - court / notarial process complicated, public - doesn t work to transfer contractual rights and obligations in all cases 13 / B_LIVE_EMEA1: v1

15 What now? Practical next steps How do we get from A (now) to B (Brexit) Selection of a transfer option Due diligence Complexity Tax Regulatory Costs, timing, resourcing Proportion of business needing to transfer Contracts and ease of transfer Implementation of chosen option 14 / B_LIVE_EMEA1: v1

16 QUESTIONS 15 / B_LIVE_EMEA1: v1

17 Your speakers ISABELLA ROBERTS Partner Corporate, London DAVID PARKES Partner Corporate, London KHASRUZ ZAMAN Partner Corporate, London / B_LIVE_EMEA1: v1

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