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Britain votes to leave the EU: The implications for you and your business

24 June 2016

On 24 June 2016, the UK voted to leave the European Union in a country-wide referendum.  The electorate turnout was 71.8% - with more than 30 million people voting - the highest turnout at a UK-wide vote since 1992. While London and Scotland voted overall to Remain a member of the EU, results from Wales, and the majority of England secured a Leave victory. Scotland voted to Remain by a margin of over 20%.

The country has spoken, and consequently Prime Minister, David Cameron, announced he would step down from his duties once he had made all the possible efforts to ‘steady the ship’.

In overnight trading the pound was down against the dollar at $1.33, its lowest level in over 30 years. The ensuing economic uncertainty has sent the City into a tailspin with the FTSE 100 index initially falling more than 8% before regaining some ground by mid-morning. The question on everyone’s lips is: What happens next?

At Charles Russell Speechlys we work with clients from a range of backgrounds. The referendum result will have significant implications for clients in a variety of ways across a range of industries. Our sector experts are working closely with clients to advise on the legal considerations for businesses and individuals and how best to manage their operations and investments in the short term within the current regulatory framework and beyond.

At this early stage no one can accurately predict the long-term outcomes of the UK’s official Brexit. But here are the likely implications for some of the key UK sectors as forecast by our industry experts:

Private Wealth
Real Estate
Family Matters
Intellectual Property
Retail & Leisure
Financial Services 
Corporate – Capital Markets
Competition Law

Private Wealth 

Piers Master, Partner

The Brexit fallout may be very different for international private clients depending on whether they are independently wealthy ultra-high net worth individuals who do not have to work, or high net worth individuals employed with London’s financial services sector. 

The ultra-high net worth international individuals have the luxury of being able to decide on their own destiny – and Brexit does not seem to provide any reason for them to leave the UK, unless the Government decides to embark on a new round of changes to the taxation of non-domiciliaries, which would be ill-advised and seems unlikely at a time when the onus must be on encouraging contributors to the UK economy to stay here.  Those employed in the financial services sector may of course have their futures decided for them by their employers.

There may also be a distinction to be drawn between the Brexit impact on those who live in the UK at the moment, and those living outside the UK investing into the UK, who now have to decide whether to continue to invest. The fall in sterling makes investing in the UK better value, and it may be that we will now see an increase in investment activity in the London property market, with the associated opportunities for structuring advice that provides to private client advisers. Perhaps, too, some of the more technical tax changes affecting the inheritance tax treatment of some UK residential property structures, which were announced in summer 2015, and of which we were awaiting further details shortly, may now be deferred or abolished as the Government’s legislative priorities have to move elsewhere because of Brexit. Such a move would certainly be welcomed by international investors who dislike frequent change in UK tax law. 


Paul Henty, Partner

Without understatement, this is one of the most fundamental legal and constitutional developments in the history of these islands.  The effects for business will be similarly far-reaching, as many sectors face a complete sea change in the way their industries are regulated.  They will watch with extreme interest as the EU forges a new relationship with the UK and may wonder whether tariff and regulatory barriers may now emerge which block the way between them and their continental customers and trading partners.  They may be extremely concerned about their ability to recruit and retain EU workers, who make a highly valuable contribution in many sectors. 

We do not know when HM Government will invoke its withdrawal right under Article 50 of the EU Treaty.  Political pressures may dictate that is done sooner rather than later. When it is activated, within the space of two years, they may face the disappearance of regulations and legal requirements which impacted upon the way they purchased and sold goods and services.  They must move quickly to take advice on how the UK’s departure affects their business and on the steps they should take in order to safeguard their commercial interests.  Yet in the face of these challenges also lies an opportunity, as business has the chance to influence much of the home-grown regulation which now has the freedom to emerge as a result of Brexit. 

Businesses will need to look in detail at their distribution and sales arrangements and assess the effect of Brexit on these.  Consider for example which party may be responsible for tariffs or other new import and export costs and the scope of territorial clauses.

Whatever their views on the pros and cons of these events, business must lose no time in seeking advice.


Emma Bartlett, Partner

One significant implication for the UK's withdrawal from the EU is how the NHS can maintain its levels of recruitment, now that it has to compete in a global recruitment market. One effect of this could be that UK immigration hurdles for non-EU nationals that work as care assistants, nurses and doctors could fall. However, increased competition may mean that increased investment to guarantee attractive salaries is necessary, and may similarly lead to longer timelines to recruit skilled overseas staff. This may cause a shortfall in applicants willing to go through a quota system to move to the UK."

As for less skilled workers, essential for care homes and elsewhere, the UK may similarly need to increase salaries to make the country a more attractive place to work. Again, that would push up costs for health service employers.

While many of our employment rights derive from Europe, it is unlikely that they will be repealed en mass since they are sufficiently embedded in our culture to be reversed.  In particular, those relating to rest periods and holidays and family-friendly rights, are likely to stay.  However, the ones creating grey areas and satellite litigation may be cut back to provide certainty such as Transfer of Undertakings (Protection of Employment) regulations (TUPE) and holiday pay. 


Rose Carey, Partner

Following the vote on 24 June, any substantive action to withdraw from the EU will take two years of negotiating from when the UK gives notice to the EU. Only with agreement from all the other member states could this two year period be extended.  Until the UK formally leaves the EU, in the short term the same provisions – including free movement – will still apply. Transitional arrangements are likely to protect people from the European Economic Area and Switzerland already living in the UK up until Brexit is implemented to acquire permanent residence.

The same should apply to British nationals living in EU member states. Following Brexit, if there is no agreement on free movement with the EU, immigration controls would be introduced - meaning people from the EEA and Switzerland may need a visa to live and work in the UK. It is very difficult for the UK to have access to the single market without agreeing to free movement. It is feasible therefore that we could Brexit the EU and end up like Norway or Switzerland and still have free movement.

Real Estate

Simon Ewing, Partner

In the lead up to the EU referendum the UK commercial real estate market experienced a period of decreased transactional activity and this trend is likely to continue in the short term as investors hold off on decisions in light of the market volatility and uncertainty concerning the negotiation of the exit process from the EU. There is also the potential for a drop in occupier demand and the uncertainty in the financial markets will inevitably have an impact.

However, such unique circumstances also present opportunities for informed investors particularly international investors who may wish to take advantage of the devaluation of the pound. The underlying fundamentals of the UK commercial property market also remain positive. The UK is internationally recognised for its sense of political stability, rule of law, democratic institutions, overall transparency in the real estate market and is a destination of innovation and business in its own right. In the medium to long term, the market is expected to demonstrate its resilience, which will be aided by the prospect of a clear policy direction by the government.  In the long run, it is also possible that the Brexit vote may bolster London’s global reputation by discharging it of the financial regulations driven by the EU.


David Savage, Partner

The impact the “Leave” vote will have on the UK construction industry is at this stage largely unknown. The mechanism for leaving the European Union involves a minimum of two years’ negotiation between the UK and the EU on Britain’s exit terms. Therefore, during this period there will be significant uncertainty in a number of areas within the construction industry.

The UK construction sector has always relied heavily on workers from outside the UK to fill both skilled and non-skilled roles. Under current EU treaties, workers in member states can travel freely to the UK in order to seek work, with no work permits or visas currently required. The Brexit vote could lead to a shortage of skilled workers that would create significant uncertainly in the market, as there is a chance it may lead to an acute skills crisis. Given the importance of access to labour and flexible working, the construction industry may stand to lose more from Brexit than any other industry.

Family matters 

Michael Wells-Greco, Partner

Sometimes relationships end in separation and divorce and couples have to go their separate ways. The UK has two years to make its divorce settlement on its departure from the EU but that is completely separate from any framework agreement for longer-term future arrangements with the EU. The question to be asked is whether the divorce will be an elegant disengagement or messy? A major change, or withdrawal from the EU instruments relevant to family law, risks disruption, considerable confusion and years of uncertainty.

This is particularly problematic given that family law is rarely a legislative priority, and at a time in the UK when the availability of legal aid has been greatly reduced. As EU law had permeated family law and practice across the EU, families will be asking whether they can continue to benefit from EU rules in relation to enforcement of matrimonial orders (divorce, separation) and parental responsibility orders (residence and contact). Some may be advised to take pre-emptive steps now rather than wait for the uncertainty following the two year withdrawal.


Paul Shapiro, Associate

While the focus of the UK's withdrawal from the European Union is likely to be on the impact on the City and migration, the impact on the sports world could be significant. However, we will not know how significant this will be until we have a clearer idea of the terms the UK negotiates for its continued relationship with the EU. If the agreement with the EU includes broad free movement obligations, such as those currently in place with EEA members, the current position regarding the movement of players between the continent and the UK will most likely continue. If, instead, an agreement is reached which includes restrictions on the movement of persons and services, the impact on the sports world would be more significant. Firstly, English players may not be able to move to the continent freely and EU nationals could be subject to entry restrictions when seeking to play in England, if post- Brexit they are treated in the same way as current non-EU nationals.

In addition, British football clubs may find themselves only able to sign foreign players over the age of 18 as, outside the EU/ EEA, they would no longer be able to benefit from the exception under the current FIFA regulations given for transfers involving 16 and 17 year old footballers within the EU/EEA. Secondly, if EU law ceases to apply in the UK, the organisers of sports competitions may be able more effectively to restrict the number of foreign players that feature in match day squads as they could potentially include EU nationals and Kolpak players within any foreign player quota. Some governing bodies may see this as advantageous in that it would allow them to discriminate in favour of the development of English qualified players to the potential advantage of the national team whereas it could be damaging to leagues/clubs who would be less competitive in their ability to attract the best players from across the Continent.

Intellectual Property

Mary Bagnall, Partner

Following the decision to leave the EU nothing will change overnight – particularly registered EU trade marks and designs which currently cover all 28 member states. It is likely to take at least two years before new agreements affecting IP are negotiated. In the meantime, we will be closely watching the UKIPO's planning in the coming weeks and months. However, as the overarching provisions of the Paris Convention and TRIPS agreement will continue to apply, in many areas it is likely to be a case of business as usual. Of significance to trade mark owners is that, on leaving the EU, the UK courts will have the last word on interpretation of our IP laws – they will not have to refer matters to the Court of Justice of the EU and then have to interpret answers which are not always clear.

As far as the European unitary patent and the unified patents court agreement is concerned, at present the UK must ratify the agreement along with Germany and France for it to be implemented. As the UK has voted to leave the EU, we will have to see how this is dealt with, but it is clear that the UPC will not include the UK. One area of significance which will arise in relation to the protection of IP will be the enforcement in the EU of UK judgments, which will no longer be automatically available.

Trade marks

Post Brexit,  EU trade marks (which provide a single trade mark registration covering the whole of the EU) will not automatically cover the UK.

Models for protecting EU marks in the UK are being discussed with the Minister for Intellectual Property (IP), including automatic re-registration of EU trade marks in the UK, or separating the UK from existing EU marks through a conversion process. Although the UK will not leave the EU for some time, brand owners are advised to register both EU and UK marks now. As EU trade marks must be used “in the EU” within 5 years of registration, they could be liable for cancellation if used only in the UK and not the EU. When EU trade marks were introduced in 1996, existing UK registrations could be incorporated into an identical EU mark to save the cost of double protection.  Upon Brexit, lapsed UK marks subsumed into EU marks will have to be reinstated, so it is essential to keep historic trade mark documents safe in case required to prove pre 1996 UK rights. 

EU-wide unregistered design rights (which provide inexpensive three year protection for designs against copying) will not cover the UK, post Brexit.  That will be a particular loss to the fashion industry. This EU right arises from the place of first marketing, so post Brexit, designers may need to launch new ranges in the EU, to take advantage of this EU design right.  Brand owners should prepare for Brexit by obtaining UK registered designs at the same time as EU registered designs, not least because unpicking the UK from the EU registered design system will be much more complicated than for trademarks.  Fortunately, copyright will suffer minimal impact from Brexit, although whether the UK remains in the EEA will have some impact. Patent law is national and largely unaffected except that the UK will not be part of the unitary patent. An eminent award-winning brand lawyer. Brands are advised to examine their IP portfolios and invest in suitable separate UK and EU protection now.

Retail & Leisure

Jamie Cartwright, Partner

With the vote for Brexit, the UK now undergoes the prescribed two year exit process from its membership of the EU.  The legal implications of Brexit will stretch far beyond the mechanics of EU membership.  Brexit will also trigger a review of EU derived legislation some of which may now face the prospect of repeal.  Further, the issue of trade uncertainty will go beyond the ‘high level’ issue of tariffs and quotas (all to be negotiated) and will inevitably bring into focus and review the individual agreements in place between UK businesses and their EU counterparts.

With the prospect of the repeal of certain legislation and the separation between the UK and the EU created by Brexit, parties on both sides of cross border agreements will be forced to reflect upon their trading terms to ensure that they continue to offer the protection they require.

Financial Services

Jonathan Bayliss, Partner

Once the initial media frenzy has died down many of our clients in the financial sector anticipate a sensible deal being concluded. The UK is not a peripheral player in the European market. It is the leading centre for financial services in Europe. Many of its institutions dominate their markets. The country has extensive expertise, a highly skilled pool of labour and long established financial services trading connections with the leading non-EU markets of the Unites States and Asia.

The remaining member states in the EU have a significant vested interest in ensuring their continued access to the UK market and the continued participation of UK institutions in European financial markets and superstructures.

There are a number of potential ways ahead, none of which may be entirely satisfactory.

One is for the UK to join the EEA to take advantage of the passports which membership confers. This would require compliance with the existing EU regulatory framework without the right to have a say in the development of new rules and regulations.

Another option would be for the UK to take advantage of existing and anticipated procedures for “third country” firms to access EU markets. This though does not provide comprehensive access for all mainstream financial activities. The UK could also enter into a series of bilateral treaties though this would be a lengthy and complex process.

More: Passporting post Brexit by Jonathan Bayliss

Corporate – Capital Markets

Victoria Younghusband, Partner

In the very short term, the European Union referendum result makes no difference to the impact of EU regulation on the UK Capital Markets. The Market Abuse Regulation took direct effect on 3 July 2016 in the UK as in the other 27 member states of the EU, together with Iceland, Liechtenstein and Norway. As the FCA say in their statement on the referendum result put out early on 24 June 2016, EU legislation will remain applicable until any changes are made, which will be a matter for the UK Government and Parliament. “Firms must continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect”. For example, the UK remains involved in the discussions and negotiations for a new Prospectus Regulation that would replace the 2003 Prospectus Directive and 2004 Prospectus Regulation and their implementing measures and is likely to come into effect before the UK exits the EU. We have been participating in these discussions for some years through our work with the Quoted Companies Alliance, and are in the process of arranging a further meeting with ESMA in the coming months to continue that work.

EU legislation comes in two types. The EU Regulations (such as MAR) have direct effect in the UK with nothing further needed from the UK government. Most UK Capital Markets legislation is of a second type, namely the legislation that derives from EU Directives, in some cases with additional requirements superimposed by the FCA (such as the Listing Rules as applied to issuers with a premium listing).

Andrew Bailey, the new CEO of the FCA, said, at the FCA’s Annual Public Meeting on 19 July 2016, that whatever the new arrangements after Brexit, much of the existing financial regulation would remain in place because the objectives of the EU legislation are shared by the UK government and regulators. If the UK negotiates a similar arrangement to Norway and becomes a member of the European Economic Area passporting of prospectuses will continue as currently (and the UK will be bound to implement all EU financial regulation). If instead the UK becomes a “third country”, access should in principle be available under the principle of equivalence, at least so far as the wholesale markets are concerned. Equivalence is already applied in the UK in relation to the major shareholder notification requirements of the Transparency Directive where the regimes in USA, Switzerland, Japan and Israel are deemed equivalent and so exempt.

It may be that Brexit will enable the UK to fine-tune capital markets regulation so that it meets the objectives of EU legislation but takes account of the UK market but is proportionate. This contrasts with the present position where extensive lobbying is required to try to ensure that EU Regulation is implemented in a way which does not disrupt the market – it was not until 10 days after the Market Abuse Regulation came into force that the European Securities & Markets Authority issued its Second MAR Q&A which confirms that the publication of preliminary results ends the closed period for directors’ dealings and the FCA’s statement of 25 May 2016. We have been in extensive discussions with the FCA on this and other aspects of the Market Abuse Regulation through our work with the Company Law Committees of the City of London Law Society and the Law Society.

Competition Law

Paul Stone, Partner

Overall, we can assert that if the UK joins the EEA, there will be little substantive change. However, if the UK does not join the EEA, EU competition law will cease to apply in the UK.  This will open up the possibility of divergence between the UK and EU competition regimes, as well as raising the risk of parallel investigations by the UK and EU competition authorities.

One of the main objectives of EU competition law has been to achieve a single market in the EU – a key policy driver in terms of the treatment of distribution arrangements. 

If the UK does not join EEA, it may be therefore possible to lobby the Government to adopt a more relaxed approach under UK competition law to areas such as:

  • Territorial restrictions: under EU competition law, it is very difficult to justify restrictions on distributors selling to other EU countries. 
  • Selective distribution: currently these arrangements are generally permissible under EU competition law but numerous conditions apply (such as freedom of sales between all distributors that are members of the system). 
  • Online sales: online sales restrictions on distributors are very difficult to justify under EU competition law.

Overall, there may therefore be some opportunities to put the case to Government to adopt a more relaxed approach to the distribution of luxury brands under UK competition law.

Remain calm

Whichever way you voted, we expect that most of us are feeling some sense of trepidation following the outcome of the referendum. There will now undoubtedly be turbulence and change, especially in the immediate aftermath but we mustn’t lose sight of the great opportunities that will be presented. We advise you to stay calm, positive and embrace this change in a measured way.

At Charles Russell Speechlys we have all of the necessary expertise to help you mitigate any challenges you or your business may face and capitalise on the emerging opportunities.

For more information, please contact our experts above, or Jasmine Dillon, Head of Marketing Communications on +44 (0)20 7203 5343.

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