New rules proposed to make it easier for foreign companies to relocate to the UK

The UK government is consulting on proposals to introduce a re-domiciliation regime that would allow foreign companies incorporated in one jurisdiction to become a company incorporated in another jurisdiction while retaining its legal personality. 

In a global business environment, a company can seek to move the jurisdiction in which it is incorporated, the process known as re-domiciliation, for a number of reasons, to gain better access to capital, to simplify group structures, to access less burdensome tax regimes, or for other commercial, economic or political reasons.  

At present, there is no re-domiciliation regime in the UK. A foreign company looking to re-domicile to the UK must incorporate a new UK company and undergo a complex contractual process to transfer the foreign company's business and assets to that new company; the business will then operate from that new legal identity. 

The consultation aims to strengthen the UK's attractiveness as a business destination and increase demand for its professional and business services. It follows a previous consultation in 2021 and a government-commissioned report by an independent expert panel in October 2024. 

An inward-only regime

The government proposes an inward-only regime, despite the expert panel in 2024 strongly supporting the introduction of a two-way re-domiciliation regime that would allow UK companies to re-domicile outside the UK as well. The government has concluded that the potential drawbacks of an outward regime outweigh the benefits and so is not proposing to introduce a two-way regime. 

In its analytical paper that accompanies the consultation, the government notes that, while two-way regimes are the norm, Australia, Singapore and Hong Kong all operate inward-only regimes, and Ireland also has an inward-only regime for funds. Under the government's plans, companies seeking to move their place of incorporation out of the UK would need to use existing mechanisms, which involve incorporating a new company in the chosen jurisdiction and transferring the assets from the UK company to that new company.

The government anticipates that companies may consider re-domiciling to the UK for many reasons, including the UK's business environment, tax regime, company law framework, capital markets and workforce. The UK may be particularly attractive to financial services companies looking to benefit from the tax regimes for asset holding companies and captive insurance companies.

Under the proposed regime, applicants may re-domicile as a private company limited by shares, an unlimited company or a public limited company, regardless of their current form. Re-domiciliation as a company limited by guarantee would not be available. Those seeking public company status would have to satisfy UK public company requirements. 

A re-domiciled company would retain its legal personality together with all property, rights, obligations, liabilities and responsibilities held immediately before the move. It would then be treated as if originally incorporated in the UK, with limited exceptions where its prior domiciliation remains relevant, such as pre-existing charges and insolvency look-back periods.

Applicant eligibility

To be eligible, an applicant would have to meet the definition of "body corporate" under English law; this may exclude some partnerships. 

There is no proposed minimum size requirement, economic substance test or minimum trading period. However, companies that are insolvent, under the control of an insolvency practitioner, being wound up or involved in a compromise or arrangement would be excluded. Eligibility would also be denied where the company or any of its proposed directors, persons with significant control or members are subject to asset freezes or director disqualification sanctions. 

Applicants would need to confirm that their intended activities are lawful, but a separate national security assessment will not be required, nor will companies need to comply with any separate "good faith" criteria.

Information requirements

Any company seeking to re-domicile would have to provide the same information as an applicant seeking to form a company in the UK; for example, its proposed name, a copy of its proposed articles of association, and details of its share capital, shareholders, directors and people with significant control. 

Additional information would also be needed in respect of any existing obligations and assets of which Companies House and the public should be aware, such as a copy of its latest accounts and details of any outstanding options, convertible loans, employee share schemes, charges and security interests.

As part of the application, the directors of the UK company would be required to make a solvency statement, similar to the statement used in other areas of UK company law. The statement confirms that the directors, having taken into account all of the company's liabilities, have formed the opinion that the company is able to pay and discharge its debts and will be able to do so for the next 12 months.

Deregistration from departing jurisdiction

As well as complying with UK requirements, the company would need to comply with the departing jurisdiction's conditions for re-domiciliation. Any issues between the company and the departing jurisdiction would need to be resolved prior to re-domiciling to the UK.

The government recognises that it would not be realistic to expect exact co-ordination of a registration and deregistration. Re-domiciliation in the UK will be capable of becoming effective UK even where the company is still registered in the departing jurisdiction. However, in order to minimise the period of overlap, the government proposes an obligation on the company to provide evidence of deregistration within a period of 60 days of UK registration. Failure to do so would result in the UK registration being revoked.

Employees and workers

As the company retains its legal personality, the government anticipates no change to the status of its employees or workers. The re-domiciled company would need to observe applicable employment or other requirements in the same way as any other UK-incorporated company. The government is not proposing any specific legislative provisions in this respect. 

Osborne Clarke Comment

The proposed regime should make it easier for multinational groups looking to carry out corporate restructurings or simplifications, and may make the UK a more attractive destination for intermediate holding companies. However, what impact an inward only regime will have on uptake is not yet clear.

In any event, implementation will require primary legislation and Companies House system changes meaning the regime remains some way from coming into force. 

Oliver Smithson, a trainee solicitor with Osborne Clarke, contributed to this Insight.