With the referendum on the UK’s membership of the EU set to dominate headline space in the media for the coming months, the possibility of Brexit is firmly on the business agenda. It is difficult to predict with any degree of certainty how Brexit would affect business. Economic forecasts vary widely and it remains unclear what form the UK’s relationship with the EU and other global trading partners would take after Brexit.
However, some businesses are analysing what Brexit might mean for them. One aspect of this contingency planning is to consider how Brexit may affect corporate finance transactions.
In this note, we examine some of the possible consequences of Brexit for existing and new debt financing (whether via loans or bonds) and equity financing transactions governed by English law.
In large part, we conclude that neither a vote in favour of Brexit, nor Brexit itself, is likely to have a significant direct impact on existing or new transactions. Contracts will remain in force and the parties’ rights and obligations will be largely unaffected. Generally, specific Brexit related contractual provisions seem unlikely to be needed at this stage, although some businesses may need to consider whether Brexit-related prospectus disclosure is appropriate. It is, however, sensible to keep the situation under review.
This article is one of a series of specialist Allen & Overy papers on Brexit. To read these papers as they become available, please visit: www.allenovery.com/brexit.