CORPORATE RE-DOMICILIATION
Your place of choice? Christy Wilson considers the UK government’s proposal to establish a re‑domiciliation regime that is open to as broad a range of companies as possible.
Christy Wilson Tax Associate, Katten Muchin Rosenman UK LLP
R
e-domiciliation enables a company to change its place of incorporation to another jurisdiction, whilst maintaining its legal identity as a corporate body. The main advantage of this process is that it gives companies maximum continuity over business operations and reduces administrative complexity compared to other routes of relocation and re-incorporation. Currently, it is not possible for a non-UK company to re-domicile in the UK. However, the UK government launched a consultation on 27 October 2021 asking for views on the introduction of a re-domiciliation process to the UK. The thought is that re-domiciliation might increase the UK’s attractiveness and availability as a destination in which to locate business and this should in turn increase UK investment. Approximately 50 jurisdictions across the world already have some form of re-domiciliation (be that inward, outward or both ways).
UK proposal
The government would like to establish a re‑domiciliation regime that is open to as broad a range of companies and corporate bodies as possible. 20
The government would like to establish a re‑domiciliation regime that is open to as broad a range of companies and corporate bodies as possible. Re-domiciled companies will have to abide by the same rules and standards as any other UK incorporated companies, and authorisation from the FCA or any other regulatory body may be required. The consultation suggests that an incoming company will need to set out a transfer case in which it must confirm that it meets the following eligibility criteria: ● authorisation from departing country; ● corporate form; ● directors of good standing; ● application poses no national security risks and is not contrary to public interest; ● registration fee;
● reporting evidence; ● solvency; and ● wider impact (i.e. the full legal and economic impacts of the transfer and the implications on shareholders, etc.). The government is also considering outward re-domiciliation. This would enable UK incorporated companies to shift their place of domicile to a different jurisdiction. It is broadly the norm for countries to have both inward and outward re-domiciliation (e.g. New Zealand, Canada, Portugal, Luxembourg and Switzerland), although Singapore, Hong Kong and Ireland only offer inward re-domiciliation. The government needs to consider the potential economic consequences of allowing outward re-domiciliation. Potential conditions are: ● standardised exit fee; ● high requirements for shareholder approval; ● minimum length of operation in the UK; ● fees and payments made; and ● settlement of any legal disputes.
Tax considerations
A key concern for the government is to ensure that any re-domiciliation regime does not ISSUE 121 | AIAWORLDWIDE.COM
