Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

As Broc Romanek noted on the, a number of SEC filings discussing Brexit have been made. I have noted some of the disclosures below, focusing on those that have been made since the vote result was announced.

Form 8-K

Many are updating their forward looking statements disclaimer to refer to Brexit in some fashion. Form 8-Ks filed since the Brexit vote have focused on immediate consequences to businesses, a sample is set forth below:

Cardtronics, Inc.

Steve Rathgaber, Cardtronics’ CEO, said, “We are pleased that Cardtronics stockholders have overwhelmingly voted in favor of our plan to redomicile in the United Kingdom. We plan to complete the steps necessary to effect the redomicile early in the third quarter.”

“Cardtronics carefully evaluated both potential outcomes of the Brexit vote in advance of announcing our plan to redomicile earlier this year. We believe our redomicile will better align Cardtronics’ corporate structure with our current and future business activities, including our substantial business presence in the U.K., where approximately 60 percent of our global workforce is based, and with the fastest-growing segments of Cardtronics today, which are in the U.K. and continental Europe,” Rathgaber added.

Enviva Partners, LP

Enviva Partners filed some slides used at an investor conference, one of which addresses Brexit. Amongst the factors pointed out are the company’s contracts are governed by UK law, and not EU regulations, the Company’s contracts are denominated in US dollars, and that while the effect of Brexit in the UK economy is uncertain, the UK government has independently pushed toward decarbonization, regardless of European Union membership.

PVH Corp.

In light of the results of the “Brexit” vote, with British voters choosing to leave the European Union and in anticipation of questions from investors, analysts and others, PVH Corp. is hereby disclosing that approximately 3% of its total net revenues are generated in the United Kingdom. This is consistent with previous disclosures regarding its businesses in key European markets.

Trinseo S.A.

Trinseo S.A. released a fact sheet on the composition of Trinseo’s European business in light of the United Kingdom’s recent referendum in favor of leaving the European Union (“Brexit”). The Company does not expect that Brexit will have a material impact on its business.

Form 10-K

Only one 10-K has been filed to date (June 29, 2016) after the Brexit vote.

Medtronic Public Limited Company

On June 23, 2016, the United Kingdom (U.K.) held a referendum in which voters approved an exit from the E.U., commonly referred to as “Brexit”. As a result of the referendum, it is expected that the British government will begin negotiating the terms of the U.K.’s future relationship with the E.U.  Although it is unknown what those terms will be, it is possible that there will be greater restrictions on imports and exports between the U.K. and E.U. countries and increased regulatory complexities. These changes may adversely affect our operations and financial results.

Form 10-Q:

Only one 10-Q has been filed to date after the Brexit vote by an operating company. Many will choose to add an additional risk factor, but disclosure in MD&A should be considered as well.  Prior to the Brexit vote, some disclosures were made, principally by funds or those in the commodity business, which focused on uncertainty in the prices of commodities and currencies.

Xura, Inc. (formerly known as Comverse, Inc.):

The announcement of the Referendum of the United Kingdom’s (or the U.K.) Membership of the European Union (E.U.) (referred to as Brexit), advising for the exit of the United Kingdom from the European Union, could cause disruptions to and create uncertainty surrounding our business, including affecting our relationships with our existing and future customers, suppliers and employees, which could have an adverse effect on our business, financial results and operations. The Referendum is non-binding; however if passed into law, negotiations would commence to determine the future terms of the U.K.’s relationship with the E.U., including the terms of trade between the U.K. and the E.U. The effects of Brexit will depend on any agreements the U.K. makes to retain access to E.U. markets either during a transitional period or more permanently. The measures could potentially disrupt the markets we serve and the tax jurisdictions in which we operate and adversely change tax benefits or liabilities in these or other jurisdictions, and may cause us to lose customers, suppliers, and employees. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate.

The announcement of Brexit caused significant volatility in global stock markets and currency exchange rate fluctuations that resulted in the strengthening of the U.S. dollar against foreign currencies in which we conduct business. The strengthening of the U.S. dollar relative to other currencies may adversely affect our results of operations, in a number of ways, including:

–Our international sales are denominated in both the U.S. dollar and currencies other than U.S. dollars. A fluctuation of currency exchanges rates may expose us to gains and losses on non U.S. currency transactions and a potential devaluation of the local currencies of our customers relative to the U.S. dollar may impair the purchasing power of our customer and could cause customers to decrease or cancel orders or default on payment; and

–We translate sales and other results denominated in foreign currency into U.S. dollars for our financial statements. During periods of a strengthening dollar, our reported international sales and earnings could be reduced because foreign currencies may translate into fewer U.S. dollars.

The announcement of Brexit may also create global economic uncertainty, which may cause our customers to closely monitor their costs and reduce their spending budget on our products and services.


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