Brexit roundtable in Milan
22 Mar 2017
On 20 March 2017 the UK Prime Minister, Theresa May confirmed that the country would give notice of its intention to withdraw from the EU on 29 March. This will start the two year period in which the UK and the EU will negotiate the terms of withdrawal.
On 21 March 2017, international law firm Simmons & Simmons hosted a roundtable on the topic in its Milan office. With perfect timing, panellists discussed a number of issues resulting from Brexit and the alternative operational structures required to start the relocation of business units from the UK into other EU jurisdictions.
Among the panellists was financial services partner, Charlotte Stalin, corporate partner Charles Bankes from Simmons & Simmons’ London office and Bepi Pezzulli, chairman of local association Select Milano. Romeo Battigaglia, head of financial markets for Italy at Simmons & Simmons chaired the discussion.
Romeo Battigaglia, head of financial markets for Italy at Simmons & Simmons, commented: “We are seeing increasing interest from London based financial institutions and asset managers to establish operations in Italy, or grow the size of their current presence. Our take from discussions with clients is that, following Brexit, there is not going to be a single hub “replacing” London, but rather a number of hubs in the main EU Cities, with an EU based legal entity required to continue benefiting of passporting rights”.
Charlotte Stalin, financial services partner at Simmons & Simmons in London, stated: "One of the most significant consequences of Brexit for UK based financial institutions is the loss of access to the EU single financial services passport. In anticipation of a hard Brexit without any transitional arrangement, UK based financial institutions have to consider their need for alternative European operating structure/hub - which will be based on factors such as current EU client base and footprint. This has to considered against the fact that the time to get set up and running with all that it entails - from authorisations from regulators, to corporate restructuring and client transition - is a process where even a 'two year' time lead time is likely to be very challenging. With Mrs May about to push the Brexit button next week, key business decisions will need to be made as time is of essence.”
Charles Bankes, corporate partner at Simmons & Simmons, London, commented: "Further to the UK Government’s announcement to invoke article 50 of the Lisbon Treaty, we need to understand better the complexities of how that Article works and the role played by each of the Community institutions in the negotiations. The negotiations will be complex and it is already clear will involve financial demands from the EU side that were not apparent at the time of the UK’s referendum last year. One aspect of leaving the EU is how European legislation, which is currently implemented in the UK or which applies directly in the UK, will be treated in English law after Brexit. The idea is that all applicable EU law will become English law on the day of Brexit and the UK Parliament will examine all such legislation and decide what should be kept and what not. This will clearly be a hugely complex task, not least because it is the first time we are facing this daunting prospect.”
Bepi Pezzulli, Chairman for Select Milano, said: "Milan is currently Europe’s most attractive financial centre and the Parliament and Government have introduced modernising changes: tax incentives (Pagano Decree on preventing brain drain and a flat tax for high earners, a patent box tax exempting income from intangible assets), Consob has introduced arbitration for financial settlements (to overcome the slow judicial system), a compliance cooperative allowing a direct relationship with the financial administration and an administrative tutor will decrease bureaucracy in liaising with the PA. Next week will see the submission of the Bernardo Decree, which is a special law for the Milan financial platform ultimately aimed at the creation of a business district devised by Select Milano, which deems that the best way to round up international investors in a European Economic Interest Grouping (EEIG) is to use English law via an arbitration system managed by a European arbitration court”.