It was announced on 23 June 2016, that the British public voted in favour of a so-called “Brexit”, or exit from the European Union (“EU“). Whilst the result of the referendum is not legally binding on the UK Government it is politically so and, furthermore, the governing Conservative Party promised that the referendum would be binding in their manifesto.
Mechanics of leaving the EU
The vote in favour of Brexit means that, at some point in the near future, the UK Government will trigger Article 50 of the Treaty on the European Union by notifying the European Council of the UK’s intention to leave. This notification will set the timer on a two year countdown within which the UK and the remaining EU Member States (“EU-27“) will have to negotiate a withdrawal agreement. The form of such a withdrawal agreement will depend on negotiations and there is no guarantee that the UK will be able to withdraw entirely on its own terms. Importantly, during the two year negotiation period, EU laws will still apply to and in the UK, and the UK will be able to continue participating in other EU business during this time.
Implications of Brexit on the Cayman Islands
EU law will continue to apply to the UK throughout the two year negotiation process. This means that there is no immediate change following the results of the referendum. Whilst many companies are struggling to understand what the implication of Brexit are for the UK with regards to the status of EU law and the UK’s trading relationship with the EU-27 and the rest of the world, the impact on the Cayman Islands appears to be minimal and the desirability of the Cayman Islands as a premier funds jurisdiction is not affected. In fact there are some discussions about how this seismic shift in the UK political landscape and its relationship with the EU-27 may benefit the Cayman Islands and there is considerable optimism about how the products offered in Cayman Islands may be more favourable post Brexit.
This publication is for general guidance and is not intended to be a substitute for specific legal advice. Advice should be sought about specific circumstances.
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