An Advisory Group of Outside Experts on Corporate Re-Domiciling

An Advisory Group of Outside Experts on Corporate Re-Domiciling Presented by: Mr. Schuster Date: Monday 2 December 2024 Overview - A very detailed and thoughtful report on an important topic - Excellent basis for future legislative action - Stepping back – why do we need corporate mobility? - Status quo in the UK and elsewhere - Motivations for re-domiciliation - Who will use the new framework if implemented? - Practical obstacles and other challenges Stepping back: Why corporate mobility? - - Why do companies need mobility and what does it mean for a company to move? • Move headquarters, operations, business, "real seat" • Change applicable company law • both Status quo in relation to UK? • (1) is easy inwards Outwards - also relatively easy (from a company law perspective) from a UK perspective • (2) and (3)? Was complex pre-Brexit, impossible now (directly) But workarounds for some / most scenarios? Motivations - Motivations for re-domiciliation? • Tax reasons... e.g. DTA access, tax base/exemptions arbitrage, shareholder level, etc • Company law reasons • Non-tax regulatory reasons / arbitrage • Moving businesses across borders? - A valuable tool in complex restructurings - Who will use it? • Prediction: (Vast?) majority will be intra-group and for tax reasons Some minority-majority conflicts, some creditor-/distribution-related arbitrage Limited use for "actual" business transfers? Obstacles? - Compare intra-US / intra-EU (/ intra-UK)... - Cross-border compatibility of laws • Sovereignty issues • Finality and shareholder protection • Report recommends that applicant to confirm that departing jurisdiction allows re-domiciliation Compliance with foreign law and articles No injunctions etc. • - - Role for court? Legal certainty and lessons from VALE • CMBD-like certificate strategy • But: foreign-law implementation • Political reality? EU experience and problems Other Challenges? - Conflict of laws - - - • Centros-type problems in inward and outward scenarios • Contract law challenges • Other conflict challenges - e.g. company law vs other areas of law, etc. Corporate law requirements • Complex questions where decisions are challenged • Minority rights and exit • Class rights when new articles are adopted? • Legal certainty? • CBMD experience Distribution rules • Share premium • Undistributable reserves? • Group reconstruction / merger relief? - • gravity model of trade and economic activity • EU and protectionism • Exit taxation problems? • Corporate mobility in the absence of harmonization... • DTA solutions Political reality check Tax law Summary - Detailed report sets out a clear path towards regulating corporate re-domiciliation "Devil in the detail" • but thoughtful report addresses most of the big questions • Outstanding points can be addressed following consultation - Political reality check - • gravity model of trade and economic activity • EU and protectionism Congratulations on a great report!