1. What will happen to any euro denominated share capital where the business is incorporated in a member state that exits the Eurozone?

This will depend on the law of the relevant jurisdiction and, in particular, any legislative changes that may be made following the exit. As the euro will continue to exist as a currency, the denomination of the share capital may remain unchanged (for example if the local laws permit share capital denomination in foreign currencies). Alternatively, changes to local legislation may result in mandatory conversion of the share capital into the new local currency. Other changes to local law (including, for example, the imposition of exchange controls - see Legislation risksection) may also result in dividend and other payments made by the company being denominated in the new local currency going forward.

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2. How might a potential member state exit from the Eurozone impact on the protection a purchaser may seek under a sale and purchase agreement?

One of the key concerns for a purchaser of the shares of a company or its business or assets is ensuring adequate protection exists in relation to any claims the purchaser may make against the vendor under the purchase agreement. If the vendor is located in a member state which exits the Eurozone following completion of the acquisition, this could impact on its ability to meet any such claims. Protections which purchasers may consider could include obtaining a parent company guarantee (from a substantive company in the vendor’s group located outside the relevant member state) or holding back some of the purchase price in a retention account to satisfy future warranty claims (with the account being held outside the relevant member state). Where there is a delay between signing the purchase agreement and completion (for example to obtain regulatory consents), consideration should also be given to including an appropriate termination right and/or condition in the agreement relating to a Eurozone exit. In all cases thought should also be given to the appropriate governing law and jurisdiction provisions to include (see Contracts risksection) and it should be noted that the position will be subject to the effect of the local legislation at the time.