By Michelle Price
HONG KONG (Reuters) - Companies aiming to relocate from the United Kingdom to Luxembourg ahead of Britain's exit from the European Union will have to establish a substantial presence in the country, including key decision-makers and functions, the Benelux nation's financial watchdog told Reuters.
Some UK businesses are looking to establish a notional presence in Luxembourg to maintain so-called "passporting rights" that would allow them to continue selling all their services across the 28-nation bloc with minimum cost and disruption.
But Jean-Marc Goy, counsel for international affairs of Luxembourg's Commission de Surveillance du Secteur Financier (CSSF), said it is "out of the question" and "unrealistic" for UK businesses to seek to establish a nominal presence.
"EU rules require substance in the jurisdiction where an entity is established and we in Luxembourg are very mindful that that substance complies at all time with the EU rules," Goy told Reuters after attending a CSSF roadshow to the Asia region.
- All of these celebrities have had their nudes leaked 35 Pictures
- Here's what it's like to fish for your dinner at Zauo NYC (photos) 21 Pictures
- PHOTOS: The best cosplay of NYCC 2018, Day 3 44 Pictures
- PHOTOS: Looking back at Heidi Klum's best Halloween costumes 19 Pictures
- PHOTOS: Nightmare Machine, the haunted house for millennials 14 Pictures
- American Music Awards 2018: Red carpet looks, list of winners 23 Pictures
- Who is Alexander Edwards, Amber Rose's new boyfriend? 9 Pictures
- Are Blac Chyna and Rob Kardashian getting back together? 8 Pictures
- Anne Frank's Diary now comes as a graphic novel 3 Pictures
- Reimagine End of Life celebrates all things death and dying 5 Pictures
- 2018 Emmy Awards: List of winners, red carpet looks 29 Pictures
Goy said the CSSF would assess each application case by case.
"It will depend on the size and the technicality of the activities being relocated, but one thing is for sure: it cannot just be a postal address or a letter-box entity. That would be absolutely unacceptable."
The CSSF will require companies to relocate a minimum number of staff, decision-makers and other key functions - covering IT, compliance, risk management and internal audit - and comply with minimum capital requirements, Goy added.
His comments followed a long-awaited speech last week by Theresa May in which the British Prime Minister ended months of speculation by outlining her vision for a so-called "hard Brexit" that will take Britain out of the EU single market.
May promised to seek the greatest possible access to European markets but her speech put a decisive end to any hope haborbed by London's financial lobby that the City of London could keep financial passporting rights.
Goy said that the CSSF has been in talks with British businesses looking to set up in Luxembourg, one of the world's largest asset management centers. He declined to provide numbers but said that the watchdog does not anticipate an influx of tens of thousands of UK staff.
(Editing by David Goodman)