The acquisition of an overseas company outside of the UK by a company incorporated in Scotland, England and Wales or Northern Ireland may have commercial benefits by allowing it to expand their reach to a wider, global market. However, when considering acquiring an overseas company, there are some key factors to be aware of, including:

Negotiating in "Good Faith"

There is no general implied duty to negotiate in good faith in Scots or English law, instead both jurisdictions recognise the spirit of individualism allowing each party to a contract to pursue their own interests. Consequently, unless the contracting parties expressly agree to act in good faith, there is no general duty to do so.

Although neither Scots nor English law recognises a general duty to negotiate in good faith, many overseas civil law jurisdictions do; particularly those in mainland Europe, including France, Germany, and Italy. The duty to negotiate in good faith effects how negotiations are carried out throughout the course of the transaction from the pre-contractual stages through to completion of the acquisition.

The precise scope of the good faith obligation varies from country to country, but broadly it requires a UK buyer to:

  • inform the other party, where reasonable, of all important transactional points it could not discover on its own;
  • adhere to certain moral, ethical and behavioural standards; and
  • not withdraw from negotiations without a reasonable cause, where the other party reasonably expects an agreement to be reached.

It is rarely possible to exclude liability for the duty to negotiate in good faith. However, in most countries that recognise such a duty, the remedy for breach is restricted to "negative interest" damages i.e damages that would put the injured party in the position it would have been had the negotiations not taken place at all.

Consequently, UK buyers of overseas companies should be aware of the possibility of (i) a different negotiating framework throughout the transactional process; and (ii) potential liabilities when making international acquisitions.

Tax Considerations

Another key consideration when acquiring an overseas company is the tax liability position:

  • before acquiring an overseas company, a UK based buyer should consider what taxes may arise both within the UK and in the jurisdiction of the overseas company (i) on the acquisition of the target company; and (ii) in relation to the continued operation, of the company within its jurisdiction; and
  • in relation to the financial performance of the overseas business that would form part of the wider company group and any impact it may have on the UK parent company’s tax liability.

It is therefore essential to receive tax advice from local counsel in the jurisdiction where the target company is based to clarify the tax position of the proposed acquisition and for continued operation. Furthermore, it is equally as important that the buyer seeks UK tax advice in relation to the impact of the overseas company's financial performance on its UK tax liability and whether any forms of tax relief will be available to it.

For advice on the tax implications of an acquisition please get in touch with a member of our tax team: Isobel D'Inverno (, Karen Davidson (, and Bob Langridge (

Execution of the Acquisition Agreements

The acquisition of an overseas target may see the acquisition agreement and ancillary documents being governed by English law. If this is the case, the proper English law contractual formalities must be followed. For any English law document to be legally binding, it must be properly made/executed by the parties to it. Generally, the Companies Act 2006 provides for how a document governed by English law may be signed. However, where one of the parties to an English law document is an overseas company, the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009/1917 provide for how the overseas company may sign the document. An overseas company may make/sign an English law document by:

  • applying their common seal (if the company has one); or
  • any manner permissible by the law of the company's place of incorporation that would apply to such a contract; or
  • a person who is authorised by the company in that jurisdiction to sign on behalf of the company (e.g. a director of the company).

There may be slight variations depending on whether the document in question is a simple contract or a deed and bespoke advice should be taken on this and on the formalities for electronic signing (if applicable).

How Brodies can help?

The above details some of the main considerations to think about when acquiring an overseas company. There are likely to be plenty of others depending on the nature and location of the target company being acquired.

Brodies Corporate Team has extensive experience of working on international transactions, including cross border acquisitions - if you have any queries relating to the acquisition or sale of an overseas company or business, please contact a member of our Corporate Team, our International Team or your usual Brodies contact.


Lesley Wisely

Practice Development Lawyer

Rebecca Easton


Armando Goncalves

Senior Solicitor

Harkirit Bilon

Trainee Solicitor (Corporate)