Comment: Don't leave anything to chance over vote

Many businesses have failed to give any thoughts to the implications if the vote goes in favour of Boris Johnson and Michael Gove in the Brexit camp. Picture: Getty

In just 17 days, Britain heads to the polls in a defining moment in UK-European relations. Regardless of whether we vote to remain part of the EU or leave, there will be wide ranging repercussions across all business sectors.

Business readiness to deal with the potential change to our European status is in question if the findings of a recent YouGov survey of more than 1,000 businesses, conducted on behalf of Pinsent Masons, are anything to go by. Alarmingly, our survey found only one in four companies in Britain, France and Germany, had any kind of plans in place should Brexit materialise.

Just 26 per cent of those surveyed had a tangible plan for dealing with the risks arising from Brexit, while more than half (53 per cent) admitted there had been no board-level discussion on the impact of a Leave vote.

There may be a temptation to do nothing until the result is known on 24 June but our advice is, even at this late stage, to devise a strategy which creates a greater sense of certainty around what issues truly matter to your organisation.

For example, it is widely predicted a vote to leave Europe would lead to an instant drop in the value of sterling and significant stock market volatility, with some economists estimating drops of 20-30 per cent in the currency and stock markets. Major credit rating agencies have indicated Brexit would likely have a negative impact on their ratings of UK financial institutions in the short-term. This would undoubtedly lead to an increase in the cost of borrowing and businesses whose plans rely on increasing or renegotiating their borrowing in the months immediately after the referendum should consider negotiating facilities ahead of the vote. Companies should take any steps they can to protect against currency risk.

The majority of commentators believe a Leave vote will constitute a huge economic shock, with some arguing there is a real risk that it could push Britain and/or the eurozone back into recession. It is important to recognise every business will be impacted in some way and those who have not started planning should do so now, regardless of whether they have direct links to Europe through clients/suppliers.

Another key step is to examine the contracts your business has in place to check for any ambiguities that might arise on Brexit. Definitions and intellectual property clauses, for example, might contain reference to the EU. There could be scope for amending clauses now. If the vote is to leave, you may find yourself in a more difficult negotiating position in the fraught atmosphere after 24 June. Looking to build appropriate flexibility into existing and future arrangements with purchasers and suppliers where possible should be a priority in the next few weeks.

Has your business thought about the possible impact on your workforce? For example, how will senior executives’ ability to work in the UK and British nationals working in Europe be affected and have you carried out any kind of review on UK staff operating outside the UK and how that might change?

Other key areas to look at include potential limitations on the freedom of movement within Europe, ensuring data availability, reviewing cross-border insurance, safeguarding intellectual property, tax changes and EU and competition obligations.

Any attempt to repeal EU law could cause difficulty in the short to medium term for regulated businesses. It’s likely that new UK regulators might need to be set up, and businesses need to consider how a temporary lack of regulatory clarity might impact on them.

Change can bring opportunity for those who seek it out. While it is undoubtedly important for organisations to focus hard on the manifest material risks arising from change in Europe, boards should also ensure time is set aside to consider the commercial opportunities that may arise.

Pinsent Masons has formed a multi-disciplinary Brexit advisory team to help businesses in the event of a Leave vote.

• James Cran is legal director and part of Pinsent Masons’ Brexit team. For more information, visit http://ow.ly/LTYy300NJZw