David Cameron has announced that he will step down as UK Prime Minister by October this year and will leave it to his successor to initiate the long and complicated process for negotiating the UK's exit terms.

In order to effect the UK's exit from the European Union, it is likely that the UK will enact an amendment to the primary legislation which governs its relationship with the European Union, the European Communities Act 1972. This would be accompanied by a decision on which elements of European law applicable in the UK should be repealed, amended or replaced. However, the UK's legislative timetable will be dictated by its requirements under European law.

The timetable for the UK's withdrawal from the European Union is governed by Article 50 of the Treaty on European Union (the Lisbon Treaty). In effect, the new UK Prime Minister is required to formally notify the European Council of the United Kingdom's decision to withdraw from the European Union. The UK Prime Minister's public statement makes clear that any formal notification will not be made before October.

Following a formal notification, Article 50 confirms that the European Union shall negotiate and conclude an agreement with the UK, "setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union." The negotiated terms of the UK's agreement with the European Union will require the approval of a qualified majority of remaining EU Member States and the consent of the European Parliament.

A timetable for UK withdrawal

Article 50 provides that the EU's Treaties shall cease to apply to the UK from the date of entry into force of the negotiated withdrawal agreement, or failing that, two years after the UK's formal notification. The two-year timeframe may be extended if the remaining EU Member States and the UK unanimously agree to an extension.

Given the wide range of issues that will need to be addressed and agreed and the complexities involved, concluding the terms of the UK's withdrawal within a two-year period sets a challenging timetable. It may be possible to reach an interim agreement on the UK's future relationship with the European Union, with further details subject to continued negotiation and agreement in the future.

What is the likely impact of the UK's decision?

At present there is high degree of uncertainty about the impact of the UK's decision to leave the European Union and its future relationship with the European Union. The precise impact will be determined by the contours of the exit agreement and arrangements concluded between the UK and the remaining EU Member States. The potential impact of the UK's decision and the key areas for exit negotiations are considered in DLA Piper's dedicated Brexit briefings.

What is crucial in the immediate aftermath of the leave decision is that companies which operate in the UK consider the challenges that lie ahead, including their key offensive and defensive priorities for any final exit agreement and how potential opportunities and challenges can be best leveraged and managed in the coming weeks and throughout the exit negotiations.

The referendum decision raises uncertainties with respect to the future conditions for UK companies trading with the European Union, the basis for European businesses operating in the UK and the status of the UK's wider commercial relationships outside of the European Union. The impact will be wide-ranging and will undoubtedly affect different sectors and particular commercial interests in different ways. However, companies which operate in the UK will need to quickly re-assess their Brexit contingency planning to identify core areas of interest for the exit negotiations and understand how and where to engage to influence those discussions towards their commercial objectives.