BREXIT –The Time Window for English Companies in Germany is Closing

Monday, 21. January 2019

Since the British House of Commons voted against a regulated BREXIT, the risk of an unregulated BREXIT on 29 March 2019 has increased. An unregulated BREXIT will have drastic consequences for the popular UK incorporated companies controlled in Germany (especially the Limited Liability Partnership - "LLP"). With the elimination of freedom of movement under European law, such companies in Germany are threatened by the loss of their legal basis of existence. It is unclear what the fate of these companies in Germany will be and what liability risks will be the result for their shareholders.  

Since 1 January 2019, the German legislature has regulated deadlines for the possibility of solving this dilemma by means of cross-border mergers. The time window for this solution will be open only as long as the United Kingdom is a member of the EU. § Section 122m of the Transformation Act now sets a clear timeframe. Under that provision, the terms of merger must be drafted and notarized before the United Kingdom leaves the European Union or before the end of a transitional period and filed for registration with the required documents no later than two years after that date.  

With a "hard BREXIT" feared by all, the deadline for notarizing the merger plan would expire on 29 March 2019. Only with a timely notarization stakeholders will safeguard the possibility of registering the merger with the commercial register within two years and of benefiting as before from the advantages of the limitation of liability in corporations.