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What are the implications of a Yes vote in the Scottish referendum for corporate lawyers? Kenneth Rose, partner at CMS Cameron McKenna in Edinburgh, says Scottish independence could be a stimulus for corporate activity, including acquisitions and disposals, as businesses assess the changes in the Scottish market.
Any form of material change in the business environment is usually a catalyst for corporate activity. With Scottish independence we would expect businesses based in Scotland and/or doing business in Scotland to be looking at their business structures to determine whether they are appropriate for any revised business and legal environment. The creation of new legal entities on either side of the border, the re-alignment of assets and the creation of revised group and corporate structures will all generate corporate activity. We can also see that such a change could be a stimulus for corporate activity, including acquisitions and disposals, as businesses assess the changes in the Scottish market.
While Scots law is already distinct from English law, the two legal systems are, in many ways, very similar. In particular the distinctions in the corporate area are generally minor, with both relying on a common set of companies and financial regulation legislation--in many cases derived from EU sources. The key regulators such as the Competition and Markets Authority, Financial Conduct Authority (FCA), Prudential Regulatory Authority and Bank of England are common across the UK. It would remain to be seen what approach would be taken to regulation in an independent Scotland and the likely impact on our clients.
Scotland already has a separate court system, although we would imagine that there would be a re-assessment of the role of the UK Supreme Court as the ultimate appellate court for civil matters (including matters as to company law).
We are preparing ourselves to communicate with our clients in the event of either a No or Yes vote. There are still material changes for our clients in the pipeline if there is a No vote which we want clients to be aware of and prepared for. In the event of a Yes vote it is key that clients understand the timescales and processes and are best positioned to react to the details of any agreement between the respective governments on matters such as currency, taxation and regulation.
The referendum campaigns have been largely political in nature and there are a number of areas which would, in the event of a Yes vote, require further focus. In particular, the detailed regulatory framework for an independent Scotland will require considerable examination and discussion both with the UK and with the EU authorities. We think that in the event of a Yes vote there would need to be considerable discussions around these issues at many different levels to determine the most appropriate solutions for the resultant countries.
There are likely to be some immediate challenges to respond to client demands. These will centre initially on advice and planning but ultimately on implementing any revised structural aspects.
In the medium to longer term, Scottish independence may lead to a greater divergence of company law, financial regulation and other relevant areas between the two jurisdictions. This will place increased onus on law firms and individual lawyers serving both jurisdictions in terms of training and generally keeping pace with changes and areas of divergence.
This has been largely covered above--the corporate area is wide and varied and the effects on each client will be distinct. At this stage, pending the outcome of the referendum and the independence negotiations and visibility of the legislative programme of an independent Scotland, it is difficult to predict the effects with any level of precision. Given the need for hard information we prefer not to speculate in such general terms at this stage.
CMS has a significant footprint both North and South of the border. Therefore, as a business it will be faced with the same issues as any other business trading in Scotland. CMS is also active across most of Europe giving it a really valuable insight into how new states have established themselves. Generally we think this gives us a very real and unique position to address the issues in the corporate market arising from a vote for Scottish independence.
Interviewed by Nicola Laver.
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
See more opinions on the Future of the Union and how this affects different practice areas here.
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