Top Eleven Key Questions for CEOs, General Counsel and Executives on Brexit Evaluation and Planning for Businesses
While each company and organisation has its own specific needs relating to Brexit, there are eleven key questions, from the legal perspective, which every CEO, General Counsel and executive should ask. These questions should be asked periodically throughout what is going to be a long Brexit process spanning not only the negotiation of the exit arrangements but also its implementation process which, in aggregate, could span a decade.
- What rights under EU Law is our business utilising? For example, do we benefit, in regard to the UK, from the freedom of establishment (eg, having a business in the UK which, because of EU law, may operate on equal terms with a UK business?), free movement of persons (eg, do we rely on workers, consultants and their families being able to move freely around the EU including the UK?), do we benefit from the free movement of goods and services (eg, with goods and services moving to, from or through the UK?) and do we benefit from the free movement of capital and payments (eg, do we move money to, from or through the UK?). How then would our business be affected by the EU withdrawing those rights from the UK or the UK favouring UK businesses over EU ones?
- How are our employees affected by Brexit? At its simplest level, the issue relating to employees arises where a national of one EU Member State works in another host Member State on the same basis as a national of the host State. Do we have workers who benefit from such rights? At a more complex level, do we have employees whose qualifications which are only recognised because of the EU law on mutual recognition of qualifications? At a more sophisticated level, businesses could also lose employees because the spouses or families of employees could not be able to remain in the UK by virtue of their nationality.
- How are our logistics affected by Brexit? This is more straightforward to ask than to answer. If a business moves goods through the UK or sells/buys to/from the UK then any delay or restrictions associated with travelling through the post-Brexit-UK could cause businesses to rethink their logistics and, in particular, the need to bypass the UK. It is too early to say that is the case and businesses who want to maintain traffic through the UK should seek to influence the debate so as to minimise disruption.
- How are our inputs and raw material sources affected by Brexit? Inputs such as raw materials may be subject to higher duties and levies if they are being imported into the EU from the UK or into the UK from the EU. So, businesses need to lobby to ensure that their input costs are not affected adversely.
- How are our sales affected by Brexit? Parallel trade is a priority for the EU: goods and services must be able to move freely around the EU. Consumers and customers in one Member State must generally be able to buy freely goods and services from other Member States. If the UK leaves the EU then parallel trade may not be possible involving the UK anymore but this all depends on the terms of the Brexit arrangements. In the meantime, many businesses in the EU are now adversely affected by parallel trade from the UK because the latter benefits from the weaker Sterling. Businesses need to plan with their competition lawyers how to address this issue.
- How do I get this company's concerns on the Brexit agenda to ensure Brexit has no adverse impact? Mindful of their obligations under lobbying laws, businesses should seek to influence all governments (including the UK one) about what needs to be done (See previous bulletin article dated 27 June 2016).
- Do we need to move offices, people, head office, facilities and company seat? Moving may be necessary so as to retain rights under EU law. Such moves need to be planned carefully and in a timely manner.
- How are any grants and research funds to the company affected by Brexit? Many businesses, particularly in the pharma and technology sectors, are dependent (in part) on EU funding (eg in research and development agreements). Businesses should check how much funding is scheduled to be received over time and what would happen if the UK were to leave.
- Have we plans for the changes brought about by Brexit? We all know that Sterling fell to a 31-year low against the US dollar in the aftermath of Brexit while Sterling has also become more competitive against the euro. But "never say never". If the euro area experienced a crisis and the euro fell in value against Sterling then how would our UK business fare with too strong a currency and new reinstated barriers vis a vis the rest of the EU? There will be many bumps on the road to resolving Brexit and is our business nimble enough to cope and adapt?
- What steps do we need to take to plan for Brexit? The steps which need to be taken by a business must be specific and tailor made. Those steps need to be amended as the likely post-Brexit regime emerges and evolves.
- How do we react as an industry to Brexit? This is trickier to answer than first appears. There could well be discussions at trade associations and other groupings but it is imperative that competitors do not disclose competitively sensitive information or form any anti-competitive position otherwise businesses could face serious competition difficulties and sanctions.
Planning for Brexit is like taking medicine. It requires a full diagnosis, a tailor-made course of treatment and to have regular check ups because the situation is evolving but entering the realm of the unknown so worth checking back with your doctor regularly after a thorough Brexit-initial examination has been undertaken.
For further information contact Dr Vincent J G Power, Partner, A&L Goodbody or your usual contact at A&L Goodbody.
Date Published: 13 September 2016