Will overseas companies soon be able to change their place of incorporation to the UK? Key takeaways from the UK Government's recent consultation paper on corporate re-domiciliation

The paper envisages that an overseas company will apply to Companies House for re-domiciliation as either a private or public company limited by shares, or an unlimited company but not a company limited by guarantee. This choice would mean that companies would not be restricted to a corporate form equivalent to that of their original form for the purposes of re-domiciliation. A re-domiciled company would also need to have an ‘appropriate registered office’ in the same way as a UK company.

In terms of criteria for the consideration of applications, key points raised by the paper include the applicant company’s solvency, national security assessments and an established departure regime from the country of origin. This means that the domestic law of any relevant origin state would have to allow for outward re-domiciliation; countries which already allow for this include Canada, New Zealand, Belgium, Switzerland and Portugal.

Given that re-domiciled companies would be subject to UK company law under the proposal, existing directors of overseas companies will be affected. All UK companies must have at least one natural director, therefore any overseas companies with an exclusively corporate directorship would have to appoint an individual prior to application. Any natural director would also be required to verify their identity in the same way as current directors of UK companies and would be subject to the directors’ duties in the Companies Act 2006. The latter of these points is particularly acute as, under UK insolvency law, director conduct can be scrutinised on a company’s insolvency retrospectively and the consultation paper suggests that director actions prior to re-domiciliation could also be considered in this instance.

Where a re-domiciled company has granted security interests, the paper recognises the need for some protection of origin state creditors by proposing that charges created before re-domiciliation be determined according to the law of the origin state, albeit subject to applicable UK conflict of law rules. This is further achieved under the framework by establishing that any insolvent company will be ineligible for re-domiciliation. Nevertheless, it is suggested that any charges created after the effective date of re-domiciliation be dealt with in an equivalent way to any other UK company and that registration of charges created both before and after re-domiciliation be required at Companies House.

Currently, any corporate bodies which are governed by the laws of another country and which own land in the UK are required to register this interest and the details of their beneficial owners on the Register of Overseas Entities. However, the consultation paper proposes that any re-domiciled companies which own land in the UK must de-register from the Register of Overseas Entities, after having disclosed their status as an overseas entity within the meaning of the Economic Crime (Enforcement and Transparency) Act 2022 as a part of their initial application for re-domiciliation.