Guidance

UK economic interest groupings (UKEIG) and European economic interest groupings (EEIG)

Published 31 December 2020

© Crown copyright 2020

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This publication is available at https://www.gov.uk/government/publications/uk-economic-interest-groupings-ukeig/uk-economic-interest-groupings-ukeig-and-european-economic-interest-groupings-eeig

This guidance answers many frequently asked questions and provides information on completing the most commonly used filings relating to this area.

The guidance is not drafted with unusual or complex transactions in mind. You may need specialist professional advice in those circumstances.

1.  About UKEIGs

A UK Economic Interest Grouping (UKEIG) is a European Economic Interest Grouping (EEIG) that was registered in the UK on EU exit day and was automatically converted to a UK Economic Interest Grouping under Article 1 of the Council Regulation (EEC) No. 2137/85 of 25 July 1985 on the European Economic Interest Grouping (EEIG).

EEIGs registered in the UK on EU exit day would no longer meet the requirements of an EEIG as set out in EU legislation.

The automatic conversion into a UKEIG ensured that any existing EEIGs registered in the UK could continue to have a clear legal status after the UK had left the EU.

The UKEIG framework retains as many elements of the EEIG framework as it was possible and practicable to retain.

The most substantial change is that UKEIGs are unable to transfer their official address outside of the UK. No new registrations as a UKEIG will be permitted.

1.1  What a UKEIG is

The UKEIG is a form of association between companies or other legal bodies, firms or individuals from different countries (either within the EU or UK) who need to operate together across national frontiers.

It carries out particular tasks for its member-owners and is quite separate from its owners’ businesses. Its aim is to facilitate or develop the economic activities of its members.

A UKEIG’s official address must be in the UK. It can also enter into arrangements with organisations outside the EU, although these organisations cannot themselves become members of a UKEIG.

1.2  What a UKEIG can do

A UKEIG’s activities must relate to the economic activity of its members but must be ancillary to them.

The concept of ‘economic activity’ can be interpreted very widely. For example, universities and research institutes may participate in an UKEIG.

The creation of a UKEIG between people in the professions (for example, solicitors) is also permitted. However, professional people will need to consider whether or not participation in a UKEIG would be contrary to the rules of their profession.

The grouping may not itself practise a profession - as this would replace the activities of the members. But it may provide services for its members which relate to their profession (for example, consultation on legal matters).

Apart from this (and the following restrictions) the UKEIG can do whatever its members wish.

1.3  What a UKEIG cannot do

A UKEIG cannot:

  • have been formed with the object of making a profit, although it may do so as a consequence of its normal operations
  • exercise management control over its members own activities or those of any other undertaking
  • hold shares in any of its members
  • take investment from the public
  • be a member of another EEIG or UKEIG
  • employ more than 500 people
  • be used to make loans to a company director or any person connected with him or her where that would be restricted or controlled by national law
  • be used for the transfer of any property between a company and a director, or any person connected with him or her, except to the extent allowed by national law
  • transfer its official address outside of the UK

2.  How a UKEIG is structured

There has been no change to the required structure of a UKEIG to that required of an EEIG.

It must be formed by at least 2 members from different EU member states or one member from an EU member state and one member from the UK. A manager or managers must be appointed to operate the UKEIG on a day-to-day basis.

2.1  Who can be a member of a UKEIG

The regulations aim to make membership of a UKEIG open to as many people and organisations as possible who are either within the UK or the EU.

The main requirement is that each member should have been engaged in an economic activity before becoming a member of the UKEIG.

2.2  Nationality requirements

A UKEIG must have at least 2 members with their central administrations or principal activities based in different countries either from 2 different EU member states or an EU member state and the UK.

To be eligible for membership - companies, firms and other legal bodies must:

  • have been formed according to the law of the UK or one of the EU member states and have their registered or statutory office (if applicable) within the UK or the EU
  • have their central administration (that is, their place of central management and control) within the UK or the EU

Individuals may become members if they carry on any industrial, commercial, craft or agricultural activity or provide professional or other services in the UK or the EU.

Organisations that are not from the UK or an EU member state may not become members.

2.3  Role of the members

The members decide how the UKEIG is run - normally set out in the formation contract of the UKEIG, but there is no requirement that this must be so.

There is no requirement for regular meetings or for decisions of the members to be taken only at meetings. All communication may be by fax, telephone or video-conferencing if the members so desire.

Each member has at least one vote. The contract of formation can give more than one vote to certain members (for example, if one member has subscribed a greater share of the capital or expertise), provided that no one member holds a majority of the votes.

The members are free to decide the voting procedures to be set down in the contract of formation except for certain decisions fundamentally affecting the existence and operation of the UKEIG, for which unanimous decisions are required.

The decisions requiring unanimity are:

  • alteration of the objects of the grouping
  • alteration of the number of votes allotted to each member
  • extension to the duration of the grouping
  • alteration to members’ contributions to the grouping’s financing
  • alteration to members’ obligations, unless otherwise provided by the formation contract
  • alteration to the formation contract not covered above, unless otherwise provided by the contract itself

2.4  Role of the managers

The members appoint managers who run the UKEIG and make normal daily decisions.

At least one manager must be appointed. UKEIGs registered in the UK may appoint legal persons (for example, a company incorporated under the Companies Act) as managers, provided that an individual is then registered as the manager’s representative.

The members determine the limits of the managers’ powers. The actions of the managers are binding on the UKEIG and the members are jointly liable for those actions.

The only limitation that can be applied to the managers by the members in this respect is that of the ‘double signature’. This means that the UKEIG is only bound by the joint action of 2 or more managers.

If this control device is used it will be effective only if its existence is published in the appropriate Gazette - see question 20 below.

A UKEIG registered in the UK is accorded legal personality as a ‘body corporate’ from the date shown on its certificate of registration.

4.  Competition rules

UKEIGs are not exempt from competition laws. They are subject to control under Articles 85 and 86 of the Treaty of Rome and to national competition legislation in the same way as any other undertaking.

For more information contact the Competition and Markets Authority:

Competition and Markets Authority
The Cabot
25 Cabot Square
London
E14 4QZ
United Kingdom

5. How a UKEIG is funded

The members of a UKEIG are not required to subscribe any capital. The grouping can be financed by capital invested by the members or by loans or donations from them or others.

The contribution of some members may be in the form of the services and skills that they can provide. UKEIGs may not seek investment from the public.

5.1 Grants

There is nothing to stop a UKEIG from bidding for government funds. However, there are no special grants available specifically for UKEIGs.

6.  Taxation rules

Taxation operates under a system of fiscal transparency. Any profits, losses or gains are shared between the members according to their shares. These are then taxed in the hands of the members according to the relevant national law in the normal way.

The provisions for taxation of UKEIGs in the UK are given in the Taxes (Amendments) (EU Exit) Regulations 2019.

6.1  How taxation rules work

For the purposes of taxation, a grouping is regarded as acting as the agent of its members: its activities are those of its members acting jointly, and each member is regarded as having a share of the property, rights, liabilities and profits of the UKEIG.

The portion of profits, losses or gains going to each member is determined by the formation contract where this is stated. If the contract says nothing the members are apportioned equal shares. The shares of property, rights and liabilities are determined in the same way.

Returns, accounts and information are given by the UKEIG acting through its managers. The members of the grouping are jointly and severally liable for any acts or omissions relating to the taxation provisions.

The concept of tax transparency does not extend to other taxes such as VAT and stamp duty. A UKEIG has to register for VAT purposes if it makes taxable supplies in excess of the registration limits, in the same way as any other person.

7. Accounting requirements

The UKEIG is not subject to any accounting or auditing requirements, and therefore does not have to file an annual return with Companies House. However, it’s required to make a return to HM Revenue & Customs (HMRC).

8. Registering in other member states

If a UKEIG has an establishment outside of the UK they should check what the registration and filing requirements are in that member state.

The registration and filing requirements for an establishment of a UKEIG may be subject to requirements to those required by an establishment of an EEIG.

Unlike the EEIG framework, the official address of a UKEIG may not be transferred outside of the UK.

9. What information must be published

The termination of a UKEIG must be published in the London, Edinburgh or Belfast Gazette (as appropriate).

Any amendments to the particulars included in the contract of formation of a grouping must also be published in the Gazette.

In the UK, the responsibility for publication of these particulars has been placed on Companies House. It’s the UKEIG’s responsibility to obtain a copy of the relevant Gazette from:

The London Gazette
london@thegazette.co.uk
PO Box 3584
Norwich
NR7 7WD

The Edinburgh Gazette
edinburgh@thegazette.co.uk
PO Box 3584
Norwich
NR7 7WD

The Belfast Gazette
belfast@thegazette.co.uk
TSO Ireland
19a Weavers Court
Weavers Court Business Park
Linfield Road
Belfast
BT1 4GD

10. Name of a UKEIG

UKEIGs must include either ‘UK Economic Interest Grouping’ or ‘UKEIG’ in their name.

The name cannot include any of the following: ‘limited’, ‘unlimited’ or ‘public limited company’, their abbreviations or their Welsh language equivalents.

Similarly, the name cannot include ‘UK Societas’.

With this exception, substantially the same rules and restrictions on names apply for UKEIGs registered in the UK as for companies formed and registered under the Companies Act 2006.

See our guidance on Incorporation and names.

11. Documents you must register

There are certain documents and details that must be filed. See forms for UKEIGS.

11.1 Notice of the appointment and removal of managers

To appoint a manager where the official address is in the UK use form EE AP01 or EE AP02.

To remove a manager where the official address is in the UK use form EE TM01.

Where the official address is outside of the UK use form EE MP01.

11.2  Form EE MP01

Form EE MP01 must also be used to file:

  • any amendment to the formation contract
  • notice of a member’s assignment of all or part of its participation in the UKEIG
  • any judicial or members’ decision ordering or establishing the winding up of the UKEIG
  • any judicial decision nullifying the UKEIG
  • notice of the appointment or termination of appointment of a liquidator or liquidators of the UKEIG
  • notice of the conclusion of liquidation of the UKEIG
  • notice of any provision exempting a new member from the payment of debts and other liabilities which originated prior to his admission

11.3  Form EE MP02

Form EE MP02 must be used to file notice of the setting up or closure of any establishment of the EEIG, except where registration on form EE FM02 is required.

11.4  Filing fees

The following documents have a fee:

  • EE FM02, the fee is £20
  • change of name for an EEIG, the fee is £10
  • registration of a charge by an EEIG, the fee is £23

All other documents are free (including form EE MP01 when it does not include a change of name).

12. UKEIG and EEIG establishments

UKEIGs can have establishments in other member states - but they will likely to be treated as branches of any other third country.

12.1  Filing requirements of a UKEIG in other member states

You will need to check with the member state where the establishment is or is planned to be what the registration and filings requirements are. The registration and filing requirements may be different to those for an EEIG.

12.2  UK establishments for EEIGs with their official address in an EU member state

EEIGs with their official address in other EU member states can have an establishment in the UK. They will need to ensure that they comply with the registration requirements within the regulations.

13.  More information

13.1 Legislation

UKEIGs were converted from an EEIG under Article 1 of Council Regulation (EEC) No 2137/85 as amended by European Economic Interest Grouping (Amendment) (EU Exit) Regulations 2018. This is referred to as ‘the Regulations’.

The main regulations that govern UKEIGs are:

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