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Impact on M&A in general

Brexit could affect deal appetite and pricing (purchase price clauses, earn-out, etc.) of the target's business, particularly if a 'hard' Brexit appears likely. Furthermore, buyers may seek contractual protection against Brexit's impact on the business, such as warranties from sellers that the target's business will not be materially adversely affected.

Due diligence – integration issues

There could be increased (tax) due diligence, including in relation to steps taken by the target company to prepare for Brexit (especially a 'hard' Brexit) and to mitigate any adverse consequences; there will need to be more careful planning for post-deal integration, particularly where the supply chain, workforce or ability to obtain licences and authorisations may be disrupted as a result of a 'hard' Brexit.

Cross-border mergers and transactions – tax

A number of cross-border M&A mechanisms rely on European regulations and/or mutual recognition, which may no longer apply. Cross-border mergers with a UK company should remain possible from a Belgian corporate law point of view; however, the principle of tax neutrality may not apply, especially in the event of a 'hard' Brexit. In fact, the Belgian Code on Income Tax provides that, to apply the regime of tax neutrality, the absorbing or absorbed entity must be a Belgian entity, or an entity located in an EU Member State, which will not be the case after Brexit.

Societas Europaea ("SE") and European Economic Interest Grouping ("EEIG") in the UK

The SE Regulation stipulates that an SE may only be established in a Member State and have its registered office and centre of administration there. After Brexit, it may no longer be possible to establish an SE in the UK or transfer its corporate seat to the UK. An EEIG could face a similar issue post-Brexit.

Belgian branches of a UK company

Belgian branches of a UK company After Brexit, Belgian branches of UK companies will be classed as branches of non-EU companies, resulting in stricter publication formalities and higher administrative costs.

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