Brexit – draft Withdrawal Agreement and latest ‘no deal’ preparations

The Government has published a draft Withdrawal Agreement that has been agreed with Brussels. Preparations for a ‘no deal’ Brexit have also continued, with the publication of further statutory instruments and a consultation paper by the Takeover Panel on the amendments required to the Takeover Code.

Hague Convention

The Government has set out how it plans, in the event of a ‘no deal’ Brexit, to ensure that the UK will continue to apply the Hague Choice of Court Convention, which currently applies to the UK by virtue of its EU membership. The Foreign and Commonwealth Office has published a command paper and explanatory memorandum which explains that “if still appropriate as part of ‘No Deal’ planning”, the UK intends to deposit an instrument of accession in December 2018 so that the Hague Convention would come into force as between the UK and EU on 1 April 2019 (since, under the terms of the Convention, it enters into force on the first day of the month following three months after deposit of the relevant instrument). The Civil Jurisdiction and Judgments (Hague Convention on Choice of Court Agreements 2005) (EU Exit) Regulations 2018 aim to ensure that, so far as the UK is concerned, its membership of the Convention will be treated as seamless. See our Litigation Notes blog post for further information.

Audit

The Government has published draft regulations, the Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2018, which aim to ensure that the framework for the regulatory oversight and professional recognition of statutory auditors and third country auditors in the UK works effectively following the UK’s withdrawal from the EU. The draft Regulations will:

• amend the UK legislation that implements the EU Audit Directive and the retained UK version of the EU Audit Regulation to address areas impacted by Brexit, such as references to arrangements with EU institutions;
• remove the preferential treatment afforded to EEA auditors; and
• give the Secretary of State power to determine the equivalence of the audit regulatory framework of “third countries”, which will include EEA Member States, post Brexit.

Takeover Panel consultation paper

The Takeover Panel has published a consultation paper (PCP 2018/2) on the changes required to be made to the Takeover Code as a result of Brexit. The changes are not significant, the key one being the removal of the regime for shared jurisdiction of a bid. Under the Takeovers Directive, and the current UK takeover regime, where:

• a UK-incorporated company has its securities listed in another EEA Member State (and not in the UK); or
• an EEA company has its securities admitted to trading on a UK regulated market (and not in its own Member State),

regulation of the bid is shared between the regulators in the two jurisdictions. This will cease post Brexit and the Takeover Panel will have full jurisdiction in the first case (provided the company has its place of central management and control in the UK) and no jurisdiction in the second (see also our corporate update 2018/22 on the Takeovers (Amendment) (EU Exit) Regulations 2019).