date | theme

24. August 2018 | UK-Limited and Brexit: Cross-border merger helps!

November 1, 2018 | Consequence of Brexit 2019: Limited no longer recognized in Germany!

4. November 2018 | Merger after share exchange violates lock period at GmbH & Limited

30. November 2018 | Limited conversion to Brexit: Avoid these 5 mistakes!

December 6, 2018 | Short-term solutions: converting Limited into GmbH (6 possibilities)

29. January 2019 | Limited in Germany no longer recognized after Brexit! (Comprehensive contribution)

15. March 2019 | Brexit Tax Accompanying Act – Can the UK-Limited still be saved?

11. April 2019 | Brexit extension until 31.10.2019: merger of the Limited to GmbH possible again! (This contribution)

The European Union grants the United Kingdom a further extension up to a maximum of 31. October 2019 to concretize the conditions for an orderly exit from the EU. This again enables clients with a UK-Limited to carry out a cross-border merger. The English Limited is merged into a German GmbH, so that the German GmbH assumes all assets and rights & obligations of the Limited as general legal successor. The Limited automatically expires.

Due to the current relevance, we have already published several contributions on this topic:

1. The new development on Brexit

1.1. postponement of Brexit to 31. October 2019

And again a postponement of Brexit! After long negotiations in the night of Tuesday, 10.04. On Wednesday, 11 April 2019, the heads of government of the EU member states have now agreed that the UK will remain in the EU beyond 12 April 2019. This time, even the seemingly distant 31.10.2019 is scheduled as a date for the withdrawal of Great Britain.

One would think that the British, having spoken out in favour of Brexit, would then also carry it out with the peace and order they were accused of. But it came, as you could notice early on, exactly the other way around. In any case, the postponement of Brexit has now created a new window of opportunity to convert a UK-Limited into a GmbH via cross-border merger. Another positive side effect: For the time being, the Limited will continue to be recognised as a corporation in Germany – until the UK actually leaves the EU.

Cross-border merger: Who benefits from the new Brexit date

First of all, all those Limited’s who could not go this way due to time restrictions due to the legal processing period, now have the opportunity to do so again. The postponement of Brexit to 31.10.2019 is therefore to be seen as a second chance to transfer a UK-Limited via the “classic” of the cross-border merger into a GmbH. In addition, all those affected who had previously opted for an alternative solution for this or other reasons, without completing it, can now also consider this option again. We have already put detailed information online in previous articles on cross-border mergers. We are happy to discuss your individual situation with you and present the optimal solution for you.

1.3 Time available framework for cross-border merger

However, the fact that the renewed Brexit postponement is now scheduled for more than half a year should be considered with reservation. Anyone who thinks he has a few months to decide could soon realize that he was wrong. Because the roadmap now approved by the EU with the new Brexit date at the end of October is not a fixed deadline.

The current regulation stipulates that the UK can already withdraw at an earlier date. In addition, a review of the Brexit situation at an EU summit is planned for mid-June. Therefore, it may well happen that the withdrawal of Great Britain already takes place in the summer. Anyone who is already sure that they are in favour of a cross-border merger should therefore take immediate action. Of course, this also applies to those affected who could no longer decide in time for this option and therefore chose an alternative. They too will now once again have the opportunity to take advantage of cross-border merger as a viable option. And for those who are still undecided, there is of course also the opportunity to be shown the best solution through comprehensive consultation. So, hurry up!

The German government estimates so far that between 8,000 and 10,000 German entrepreneurs have founded a limited company in the UK. What is special about this is that the Limited does not operate in the UK, but operates exclusively in Germany. In legal terms, this means that a limited company with a registered office (mostly) was founded in London, but the administrative headquarters and place of management was moved to Germany immediately after its establishment. Compared to a German GmbH, a limited liability company has thus been created in Germany for little money.

Actually, the German legal situation does not allow such an approach. It was only through the case law of the ECJ in 2000 and 2001 that Germany was persuaded to recognise English limited companies with administrative headquarters/management in Germany. This is due to the fact that the so-called freedom of establishment (Article 49 TFEU) obliges all EU Member States to recognise capital companies within the European Union.

Therefore, we described in a separate article that this case law no longer applies to the English Limited if the UK leaves the European Union. The consequence of this is that the English Limited will no longer be recognized as a corporation in Germany after Brexit. This results in considerable disadvantages, such as: