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Corporate law: What kind of exit will the “Brexit” lead to?

On 23 June 2016 a referendum was held in the UK regarding the question “Should the United Kingdom remain a member of the European Union or leave the European Union?” The majority of people voted to leave the EU and thus the Brexit became reality. What will be the consequences for entrepreneurs and employees in the Netherlands?

The Union Treaty provides that, from the time the European Council will be notified of the exit (which should take place after the summer) the European Union (EU) and the United Kingdom have two years to sort out the future relation between both parties (withdrawal agreement). Negotiations regarding the withdrawal agreement cannot start before the European Union has received the British notification. The British Prime Minister Cameron indicated that he would like to leave this duty to his successor who might not be in post before October. During the negotiations, the UK will remain a member of the EU. After 2 years, the United Kingdom will receive non-Member status. The European principles of freedom (free movement of persons, goods, services and capital) will then lapse. In addition, after the exit, the European legislation (including Regulations and Directives) will, in principle, no longer apply to the United Kingdom.

What are (potential) legal consequences globally operating entrepreneurs in the Netherlands should keep in mind?

  • European employees have fewer rights to live and/or work in the United Kingdom (and vice versa) due to changes in the residence and employment rules.
  • European entrepreneurs have fewer possibilities to establish themselves in the UK and/or to offer their goods and services there (and vice versa).
  • Provisions in contracts regarding the contractual territorial scope must be reassessed.
  • The provisions of the Rome I and II Conventions (regulating the applicable law in cross-border contracts) will cease to be applicable in the United Kingdom.
  • The ‘City of London’ is the financial heart of Europe. After the exit, the European financial and supervision law will lapse in the United Kingdom.
  • Judgments from the Netherlands will be recognised and enforced less quickly (and vice versa).
  • The United Kingdom will no longer be bound to the European Insolvency Regulation. This regulation provides that, currently, the members have to recognize their mutual bankruptcy proceedings.
  • The European order for payment will no longer exist for the United Kingdom. This order now provides a relatively easy way to settle cross-border monetary claims (collections).
  • The (future) European General Data Protection Regulation will not apply to the United Kingdom.
  • Mergers and Acquisitions could be suspended before their closing because contracts drawn up for the purpose might contain a provision preventing that the deal must be closed under these conditions (a material adverse change clause).

As no state has left the European Union before, it remains unclear what the consequences of the Brexit will be exactly and what will have to be dealt with in all kinds of bilateral conventions. Would you like to stay up to date on the developments? Please contact Russell Advocaten on +31 20 301 55 55 or via reinier.russell@russell.nl.


The general information contained herein is intended for informational purposes only. It is not intended to be, and should not be construed as, legal advice or legal opinion on any specific facts or circumstances.

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