Brexit Risk Factor

Summary

This risk factor is meant for use in a public company's periodic disclosure, such as a Form 10-K, or a registration statement, such as a Form S-1, to disclose risks relating to the withdrawal of the United Kingdom from the European Union. This clause contains drafting notes and practical guidance. After a 2016 U.K. referendum on whether to leave the EU passed, it began the long and unprecedented process of doing so. After years of negotiation, the U.K. formally left the EU on January 31, 2020 and entered into a transition period that ended on December 30, 2020. During the transition period, the U.K., EU, and Euratom (a European nuclear energy regulator) entered into a Trade and Cooperation Agreement (TCA) that laid out the essentials of continued trade, movement of people between the U.K. and EU, U.K. participation in EU programs, and dispute resolution mechanisms. The considerable changes to many aspects of doing business resulting from withdrawal from the EU, entry into the TCA, and the likelihood of further trade agreements between the U.K. and the EU and/or other nations or political entities has created and will continue to create substantial uncertainty for businesses operating in the U.K., for U.K. businesses dealing with or operating in the EU, and other businesses dealing with the U.K. and/or the EU. Accordingly, businesses will need to disclose the risks relating to this uncertainty, to any actual negative regulatory or trade outcomes arising out of Brexit-related agreements, or Brexit-related effects on the U.K. economy. You should tailor the language in these risk factors to fit the specifics of the company's business, its indebtedness, its exposure to tariffs and increased regulation, currency exchange rate concerns, and other relevant circumstances. For information on drafting risk factors, see Risk Factor Drafting for a Registration Statement and Top 10 Practice Tips: Risk Factors.