Presentation on UK company law after Brexit published

The Department for Exiting the European Union has published a presentation produced by the UK’s Brexit negotiating team for discussion with the EU. It is intended to inform the development of the future framework for UK company law, including accounting and audit, post-Brexit.
The presentation states that company law underpins successful UK and EU economies and that a common approach would contribute to a deep and special future economic partnership. Key areas for this common approach are suggested to be:• establishment: the rules that set out whether and how companies and individuals from another jurisdiction can establish a company, branch or subsidiary• MRQP: the mechanism through which individuals’ qualifications, including those of auditors, are recognised across borders

• accounting and audit: the framework that facilitates the cross border listing of securities and allows companies with cross border operations to rely on accounting and audit services provided in other countries

According to the presentation, the existing accounting and audit framework underpins strong markets and contributes to the joint economic prosperity of the UK and EU. As such, it is intended that the UK’s post-Brexit regime will be consistent with the current EU regime and will provide continuity. A full UK corporate reporting and audit framework will be introduced, which will be transparent and will be policed by the UK’s independent regulator, the Financial Reporting Council. The UK will transpose the EU-adopted IFRS into law and has already transposed the Accounting and Audit Directives in full.

The UK is committed to proper disciplines in corporate reporting and audit frameworks because it protects the internal market and creates a fair basis for UK companies to compete internationally. Consistency with existing practices for ongoing monitoring and enforcement by an independent regulator will ensure continuing clarity on compliance for companies and auditors.

However, issues are raised because, although the EU has third country regimes for accounting and audit equivalence in some areas, the existing third country regimes do not:

• guarantee equivalence by the end of the Brexit implementation period: UK and EU companies and enforcers need early assurance that accounting and audit standards will be equivalent on the day of Brexit

• guarantee equivalence on a continuing basis: UK and EU companies and enforcers require confidence that equivalence will not be withdrawn without undue notice

• cover all accounting and audit issues, such as corporate reporting, audit requirements and audit firm registrations

The UK negotiating team are interested in exploring the mutual benefits of agreeing provisions with the EU on these issues.

Area of Interest