Brexit update and the Impact on Digital health startups. Includes Introduction, Advantages of Doing Business in the UK, The Three Likely Scenarios, The “Chequers Deal”, Canada Plus, No Deal, Contingency Planning

1. Brexit Update
mHealth | 4 October 2018

2. Contents
➢ Introduction
➢ Advantages of Doing
Business in the UK
➢ Brexit Update
• Timeline
• The Three Likely
Scenarios
• The “Chequers Deal”
• Canada Plus
• No Deal
• Contingency Planning
Introduction
Simon Marks, partner
and joint head of High-
Tech & Start Ups
Epstein Rosenblum
Maoz (ERM)

3. ➢ Advantages of Doing Business in the UK
• Based on the World Bank Doing Business Survey 2018, the UK is ranked Second in Europe in terms of
ease of doing business, and Seventh in the world. It offers the following advantages:
✓ A deep pool of workforce expertise;
✓ Excellent transport links with the rest of the world;
✓ A central time zone position ideally placed between the markets of the East and West;
✓ Accessibility of language;
✓ A solid, credible and long-established structure for companies to build businesses;
✓ One of the world’s global-financial centres;
✓ A top-class environment for research and development work;
✓ Opportunity to raise capital through the UK markets, with access to international investors;
✓ Low corporation tax – currently 19%, reducing to 17% by 2020;
✓ A wide network of Tax Treaties;
✓ A familiar gateway into the rest of Europe and a member of the EU*.

4. Brexit - Timeline from Referendum to Brexit
• 23 June 2016 – UK public vote to leave the EU by 51.9% to 48.1%. David Cameron resigns
immediately as prime minister.
• 29 March 2017 – the UK government triggers Article 50 of Treaty of Lisbon, which starts the 2 year
clock ticking for UK to leave the EU.
• 8 June 2017 – conservative party losses overall majority in UK general election.
• 26 June 2017 - formal negotiations begin between UK and EU.
• 19 March 2018 - UK and EU make decisive steps in negotiations. Agreements include dates for a
transitional period after Brexit day, the status of EU citizens in the UK before and after that time
and fishing policy. Issues still to be sorted out include the Northern Ireland border, free movement
of people, Brexit bill, etc.
• 29 March 2019 - Brexit day – the UK ends its membership of the EU and enters a transition period.
• 31 December 2020 - the transition period ends and the new economic and political relationship
between the UK and the EU begins.

5. • What Will Brexit Look Like?
There are currently three potential scenarios at the end of the Brexit
negotiations:
1. a deal similar to the UK Government’s Whitepaper – the so
called “Chequers deal”;
2. a “Canada plus” style deal;
3. no deal.
Or perhaps… 2nd referendum?
Brexit - The Three Likely Scenarios

6. • Published in July 2018, the Whitepaper sets out the type of relationship
the UK wants with the EU after Brexit:
• establishment of a free trade area with a common rule book for industrial
goods and agricultural produce;
• a new FCA (facilitated customs arrangement) with the EU. The UK would apply
EU tariffs and trade policy for goods intended for the EU and would also apply its
own tariffs and trade policy for goods intended for consumption in the UK;
• The White Paper emphasises repeatedly that free movement of people will
come to an end. Full details of a new immigration policy are due to be published
in a separate White Paper;
• UK will seek active participation in (if not full membership of) the European
Aviation Safety Agency, the European Chemicals Agency and the European
Medicines Agency;
Brexit - UK Government’s Whitepaper – the “Chequers deal”

7. • Cont.
• UK will exit EU rules on services, meaning financial and other services will no
longer be able to take advantage of passporting, which gives them automatic
access to other EU markets;
• The ECJ would no longer have “direct jurisdiction” over the UK, but UK-EU
disputes will be dealt with by a “joint committee”;
• Northern Ireland - UK intends to avoid a hard border between Northern Ireland
and the Republic by aligning with all EU rules “necessary to provide for
frictionless trade”.
Brexit - UK Government’s Whitepaper – the “Chequers deal”

8. Brexit – Canada Plus
• A deal based on Canada’s free trade agreement with the EU signed in
October 2016, but what are the key difference with the “Chequers deal”?
• deal based on tariff free trade for goods and agricultural produce;
• no “common rule book” meaning the UK would be able to change its rules much more, with
smooth cross-border trade ensured by a system of “mutual recognition”;
• the UK would leave the customs union and avoid any common rulebook, so there should be
no curbs on agreeing trade deals with non-EU countries;
• UK courts would not be subject to the ECJ. A joint committee (similar to what the EU has in
place with Canada and Korea) would make binding decisions to resolve issues between UK
and EU;
• UK will have total freedom over immigration policy, at the price of more limited access to the
EU market;
• Northern Ireland - position is unclear; there would either need to be a hard border between
Norther Ireland and the Republic or UK would stay in a backstop arrangement with
Northern Ireland which would be a part of the UK, but would remain subject to the EU
customs union.

9. Brexit – No Deal
• No deal - what are the implications?
• the transition period from March 2019 to December 2020 - designed to give
businesses and organisations additional time to respond to the changes -
would be off the table;
• UK would be subject to World Trade Organization (WTO) rules meaning UK
exports would face the same customs checks and tariffs as other countries
outside of the EU;
• The rights of three million EU citizens residing in the UK and more than one
million Britons living in the EU would not be protected;
• Northern Ireland - if the UK were to leave without an agreement in place,
the Republic would come under huge pressure from Brussels to exert
customs and immigration controls, i.e. a hard border.

10. Brexit – Contingency Planning
• Brexit has the potential to directly or indirectly affect most transactions,
some of the possible effects are:
• Trade tariffs on goods
• Border delays
• Freedom to provide services
• Licences and consents
• Freedom of movement for workers
• Changes in law
• Currency exchange rates
All of this should be considered when entering into long term contracts
directly or indirectly involving UK or EU parties. In addition, existing
contracts should be reviewed.

12. Truly cross-border