With the news still fresh, an understanding of the potential implications of Britain's vote last week to exit the EU is just now beginning to emerge, and the actual impacts will take years to play out and effect. At a minimum, the exit - from the time the UK gives notice of its intent to leave per Article 50 of the Treaty of Lisbon to its no longer being a member of the EU - is a 2-year process, and there are several alternative forms of EU/non-member state arrangements that the new UK/EU relationship could take depending upon withdrawal negotiations, as discussed in these memos from Sullivan & Cromwell and Gibson Dunn.
In the meantime, as noted in Dorsey's memo, depending upon each company's facts and circumstances, real-time Brexit-related effects and uncertainties and associated risks - including currency fluctuations, and changes in trade agreements and labor and immigration policies - may impact Q2 earnings, as well as warrant disclosure in Risk Factors, Forward-Looking Statements and the MD&A. In that regard, this White & Case checklist of potential implications to consider and Parker Poe's post on Risk Factor and MD&A considerations, are helpful resources. Deloitte's memo on Financial Reporting Considerations covers additional considerations/potential implications including accounting policies, the impact of market volatility on assumptions and forecasts, and impairment reviews.
Along those lines, Medtronic's (NYSE:MDT) Risk Factors in its Form 10-K filed Tuesday include a cautionary note about the potential adverse impacts of Brexit on its operations and financial results, and Xura, Inc. (Nasdaq:MESG) included in its Form 10-Q filed on Monday a fairly robust risk factor about the potential Brexit impacts on its business, business opportunities, results of operations, financial condition and cash flows. And on Tuesday, Carnival Corp. reportedly discussed the impact of the Brexit vote in relation to its guidance for the year during its earnings call - indicating its belief that no adjustments beyond those considered in conjunction with impacts from currency fluctuations were necessary .
In the Current Events disclosure arena, in what may signal the start of a trend (although it's far too soon to tell), PVH Corp (NYSE: PVH) and Trinseo (NYSE: TSE) filed Item 8.01 (Other Events) and Item 7.01 (Reg. FD) (respectively) Form 8-Ks addressing their UK/EU exposure in light of last week's vote. Earlier this week, Enviva Partners (NYSE: EVA) filed a slide presentation on a Form 8-K in connection with an investor presentation that includes a page (p. 29) devoted to Brexit implications, and CardTronics (Nasdaq: CATM) noted in its press release (also filed on Form 8-K) announcing stockholder approval of the company's relocation from Delaware to the UK that it had "carefully evaluated both potential outcomes of the Brexit vote in advance of announcing our plan to redomicile earlier this year."
In recognition of the magnitude of this development, its widespread implications, and its gradual and long-term unfolding, Norton Rose Fulbright, whose global headquarters is in London, has invited Society members to tap into its newly-established dedicated Brexit website - inclusive of this blog and topical and industry-specific FAQs. In addition, we are posting (and maintaining on an ongoing basis) relevant website links and blog sites, memos, guidance and other helpful resources for Society members on our new "Brexit" topical page.
See also this memo from WilmerHale, this post from Hunton & Williams (re: data privacy), and these articles from CGMA, the WSJ (here and here) and Reuters.