Listed companies, or those considering a listing, will also need to look at the impact of Brexit on the UK markets and the FCA Listing and Prospectus Rules. Brexit is also likely to have an impact on the M&A market. We have highlighted some of the key issues below, but for a more detailed discussion, see our briefing Brexit: what next for Listed Companies?.
The Companies Acts are deeply embedded in English law and are likely therefore to remain largely in place despite extensive derivation from EU Company Law Directives.
The UK capital markets regime (in particular the Prospectus Rules and the Disclosure Guidance and Transparency Rules) is largely derived from EU Directives and Regulations, and therefore susceptible to reform in the longer term, but is unlikely to be replaced wholesale given the need for UK businesses to continue accessing European capital.
Assuming that the UK markets will lose their status as “regulated markets” under EU law, companies listed in both the UK and EEA jurisdictions may find their compliance burden increases due to having both UK and EEA regulators as opposed to a single “Home State”. It remains to be seen what reciprocal arrangements may be put in place.
Withdrawal from the single market for financial services implies potential loss of "regulated market" status and prospectus passporting rights. Reciprocal arrangements post-Brexit remain dependent on the outcome of negotiations on the UK's future relationship with the EU. See Brexit: Financial Services and Markets
Brexit risk factors are likely to appear in capital markets documentation and investigation of a company’s readiness for Brexit will become a feature of due diligence on IPOs and other fundraisings.
- Brexit risk factors will need to be considered for inclusion in prospectuses.
- Annual reports should note any significant Brexit risks.
We expect the principal ECM regulations to be similar to the current rules, although the FCA would have the power to amend its rules, e.g. to widen prospectus exemptions or modify the market abuse rules.
It will also be necessary to consider the transaction/compliance costs involved in the loss of prospectus passporting rights and the necessity of reporting to both UK and EEA regulators.
The Takeover Code is likely to remain in place since it mostly pre-dated the EU Takeovers Directive and is widely accepted. See our client briefing on public M&A post-referendum here.
Obtaining merger clearance for certain transactions is likely to become more onerous post-Brexit (see Brexit: Competition Law).