Shorter Reads

Corporate re-domiciliation

The Government is consulting on the proposed introduction of a corporate re-domiciliation regime in the UK. What are the proposals and how do they compare to the current rules?

1 minute read

Published 7 January 2022

Authors

Share

Key information

  • Specialisms
  • Business
  • Services
  • Corporate
  • Corporate recovery, restructuring & insolvency

Public consultation

The Government is consulting on the proposed introduction of a corporate re-domiciliation regime in the UK. The proposals would allow a company incorporated in another jurisdiction which permits re-domiciliation to transfer its place of incorporation to the UK whilst retaining its same legal identity.

Many other jurisdictions already allow legal re-domiciliation. Indeed, in some jurisdictions, a company will be deemed to have become a local company, if it is managed and controlled from there, regardless of where it was incorporated.

The current rules

The UK follows the “incorporation theory” of legal domicile. This means that, even if an overseas company is managed and controlled from England, it does not (and cannot) become an English company for legal purposes. Equally, an English company which is managed and controlled from another jurisdiction remains legally an English company – although it can be tax resident in that other jurisdiction.

Thus, if an overseas entity wishes to do business as a company incorporated in England, it must establish (or acquire) an English company, and then transfer its business to that company. Or, if it wants to cease to operate as an English company, and instead run its business as an entity incorporated elsewhere, it must transfer its business out to an overseas entity. Clearly, this will mean a significant commercial burden to assign assets and liabilities, and in some cases such assignment may even be prohibited.

The government’s proposals

The proposed re-domiciliation regime, however, would allow legal continuity (no significant changes need be made to the company’s corporate history, management structure, assets, intellectual property and other property rights, commercial contracts, regulatory approvals) and significantly reduce the administrative burden of relocating.

The government intends this to maintain the UK’s reputation as a competitive financial and business centre, to promote financial growth and to attract incoming businesses. Although it isn’t yet clear which sectors and industries are most likely to benefit, the proposal is designed with the object of attracting a wide range of companies and there is unlikely to be any financial threshold requirement.

To ensure consistent application of corporate governance, transparency and accountability rules, the government proposes eligibility criteria such as authorisation from the departing country, directors of good standing, solvency, and a report outlining the full legal and economic impact of the transfer. The government also intends to have an overall discretion regarding security risks contrary to the public interest.

Interested in relocating?

For further information about relocating your business to the UK, please contact Sharon Fryer or Ragavan Arunachalm.

Message us on WhatsApp

Related latest updates
PREV NEXT

Related content

Arrow Back to Insights

Shorter Reads

Corporate re-domiciliation

The Government is consulting on the proposed introduction of a corporate re-domiciliation regime in the UK. What are the proposals and how do they compare to the current rules?

Published 7 January 2022

Associated sectors / services

Authors

Public consultation

The Government is consulting on the proposed introduction of a corporate re-domiciliation regime in the UK. The proposals would allow a company incorporated in another jurisdiction which permits re-domiciliation to transfer its place of incorporation to the UK whilst retaining its same legal identity.

Many other jurisdictions already allow legal re-domiciliation. Indeed, in some jurisdictions, a company will be deemed to have become a local company, if it is managed and controlled from there, regardless of where it was incorporated.

The current rules

The UK follows the “incorporation theory” of legal domicile. This means that, even if an overseas company is managed and controlled from England, it does not (and cannot) become an English company for legal purposes. Equally, an English company which is managed and controlled from another jurisdiction remains legally an English company – although it can be tax resident in that other jurisdiction.

Thus, if an overseas entity wishes to do business as a company incorporated in England, it must establish (or acquire) an English company, and then transfer its business to that company. Or, if it wants to cease to operate as an English company, and instead run its business as an entity incorporated elsewhere, it must transfer its business out to an overseas entity. Clearly, this will mean a significant commercial burden to assign assets and liabilities, and in some cases such assignment may even be prohibited.

The government’s proposals

The proposed re-domiciliation regime, however, would allow legal continuity (no significant changes need be made to the company’s corporate history, management structure, assets, intellectual property and other property rights, commercial contracts, regulatory approvals) and significantly reduce the administrative burden of relocating.

The government intends this to maintain the UK’s reputation as a competitive financial and business centre, to promote financial growth and to attract incoming businesses. Although it isn’t yet clear which sectors and industries are most likely to benefit, the proposal is designed with the object of attracting a wide range of companies and there is unlikely to be any financial threshold requirement.

To ensure consistent application of corporate governance, transparency and accountability rules, the government proposes eligibility criteria such as authorisation from the departing country, directors of good standing, solvency, and a report outlining the full legal and economic impact of the transfer. The government also intends to have an overall discretion regarding security risks contrary to the public interest.

Interested in relocating?

For further information about relocating your business to the UK, please contact Sharon Fryer or Ragavan Arunachalm.

Associated sectors / services

Authors

Need some more information? Make an enquiry below.

    Subscribe

    Please add your details and your areas of interest below

    Specialist sectors:

    Legal services:

    Other information:

    Jurisdictions of interest to you (other than UK):

    Article contributors

    Enjoy reading our articles? why not subscribe to notifications so you’ll never miss one?

    Subscribe to our articles

    Message us on WhatsApp (no calls)

    Please note that Collyer Bristow provides this service during office hours for general information and enquiries only and that no legal or other professional advice will be provided over the WhatsApp platform. Please also note that if you choose to use this platform your personal data is likely to be processed outside the UK and EEA, including in the US. Appropriate legal or other professional opinion should be taken before taking or omitting to take any action in respect of any specific problem. Collyer Bristow LLP accepts no liability for any loss or damage which may arise from reliance on information provided. All information will be deleted immediately upon completion of a conversation.

    I accept Close

    Close
    Scroll up
    ExpandNeed some help?Toggle

    Get in touch

    Get in touch using our form below.