Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, whether the EU requirement for businesses to be owned by a majority of EU-based shareholders will continue to apply to UK based businesses after the transition period.

There is no requirement for businesses to be owned by a majority of EU-based shareholders in current EU law or within the UK’s Companies Act 2006.

However, both Societas Europaeas (SEs) and European Economic Interest Groupings (EEIGs), which are EU specific company formations, have certain ownership-linked requirements. SEs, for example, must have their registered offices in the EU and at least two of the bodies that form an SE must have a presence in different Member States. Similarly, EEIGs, which are a form of association between companies or other legal bodies, must be based in the relevant EU Member State and companies or firms must be incorporated in the EU to become members of an EEIG.

From 1 January 2021, SEs and EEIGs will no longer be able to be registered in the UK and any UK-based SEs and EEIGs that have not made alternative arrangements will be automatically converted into new UK corporate structures, respectively UK Societas and UK Economic Interest Groupings (UKEIG). Members of UKEIGs will continue to be allowed to be based in either a part of the UK or in any EU Member State, and UK Socieatas will not be subject to any continuing ownership-linked requirements.

In addition, there are ownership or voting rights requirements in specific regulated sectors where specific EU regulations apply. Examples include audit firms, where the existing requirements as to the majority of voting rights on the ownership body and the management body will be amended so that each majority must be held by UK registered audit firms or by individuals with UK audit qualifications or UK recognised qualifications.