Features of transformation of legal entities in the conditions of Brexit

Abstract

In connection with the decision to withdraw the UK from the EU a number of companies will need to take into account that from 1 January 2021 EU law will no longer apply to the United Kingdom and will become a "third country" for EU Member States, unless the provisions of bilateral agreements or multilateral trade agreements. This means that the four European freedoms (movement of goods, services, labor and capital) will no longer apply to UK companies to the same extent as they did during the UK's EU membership. The purpose of the article is to study, first of all, the peculiarities of the influence of Great Britain's withdrawal from the European Union on the legal regulation of the status of European legal entities. Brexit results in the inability to register European companies and European economic interest groups in the UK. Such companies already registered before 01.01.2021 have the opportunity to move their place of registration to an EU Member State. These provisions are defined in Regulations 2018 (2018/1298) and Regulations 2018 (2018/1299).British companies with branches in EU Member States will now be subject to the rules applicable to third-country companies, which provide additional information on their activities. In the EU, many countries apply the criterion of actual location, which causes, among other things, the problem of non-recognition of legal entities established in the country where the criterion of incorporation is used (including the United Kingdom), at the same time as the governing bodies of such legal entities the state where the settlement criterion is applied. Therefore, to reduce the likelihood of possible non-recognition of British companies, given the location of the board of such a legal entity in the state where the residency criterion applies, it seems appropriate to consider reincarnation at the actual location of such a company. Reducing the risks of these negative consequences in connection with Brexit on cross-border activities of legal entities is possible by concluding interstate bilateral and multilateral agreements that would contain unified rules on conflict of law regulation of the status of legal entities.