Transport
A transaction will be notifiable when a person gains control or
acquires a right or interest in a qualifying entity. A qualifying entity is any entity that carries on
activities in the UK, or supplies goods or services in the UK. In
other words, acquisition of non-UK businesses will be caught where
that business provides relevant goods or services to UK customers.
A person gains control of a qualifying entity if the person
acquires a right or interest in the entity and one or more of the
following arises as a result:
the percentage of the shares or voting rights that the person
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In November 2020, the UK Government introduced the National Security and Investment Bill (the Bill ). Subject to the passing through UK Parliament, the Bill is expected to become law in early 2021, ushering in a Committee on Foreign Investment in the United States (CFIUS)-style regime for the UK Government to scrutinise foreign investment. The Bill gives the Secretary of State for Business, Energy and Industrial Strategy (BEIS) powers to screen business transactions where BEIS reasonably suspects there is, or could be, a risk to national security. The provisions of the Bill would cover the whole of the UK and will also apply to certain transactions that involve the UK. Once passed, the Bill would come into effect from 12 November 2020. As such, non-UK investors will need to be mindful of the proposed reforms given that the UK Government will have retroactive enforcement powers in respect of transactions that have occurred
Satellite and space technologies
Acquisitions that involve the acquirer taking 15% or more of the target’s votes/shares (and subsequent specified step increases), or gaining the ability to influence resolutions governing the target’s affairs, will be caught by the mandatory regime.
“Call-in” powers
The Bill also introduces both a “call-in” power and a voluntary notification system for an extremely wide range of transactions that qualify as trigger events across all sectors of the economy. Minority acquisitions, asset purchases, IP licences, loans and conditional deals are among the transactions that could be caught.
Voluntary notification of deals that potentially raise national security concerns will be through an online portal to a new Investment Security Unit, set up in the Department for Business, Energy and Industrial Strategy.
Wednesday, December 16, 2020
Key takeaways
→ The new National Security and Investment Bill expands the UK government’s powers to intercede in acquisitions of UK companies where it determines there is a potential national security threat.
→ The Bill creates a new government agency, the Investment Security Unit (ISU) to oversee foreign direct investment review, removing the power from the competition/antitrust regulator, the CMA.
→ Regulators will be able to “call in” transactions that were not notified but that the Secretary of State determines may pose a national security risk.
→ A mandatory notification will be introduced for certain sectors, including penalties for failure to notify, but the details of those requirements have not been completed.
Key takeaways
→ The new National Security and Investment Bill expands the UK government’s powers to intercede in acquisitions of UK companies where it determines there is a potential national security threat.
→ The Bill creates a new government agency, the Investment Security Unit (ISU) to oversee foreign direct investment review, removing the power from the competition/antitrust regulator, the CMA.
→ Regulators will be able to “call in” transactions that were not notified but that the Secretary of State determines may pose a national security risk.
→ A mandatory notification will be introduced for certain sectors, including penalties for failure to notify, but the details of those requirements have not been completed.