Investors should plan today for the UK’s National Security and Investment Bill.
The UK government has published draft legislation for a new and comprehensive FDI regime, designed to screen transactions on national security grounds. The regime is expected to come into force early next year and will impact a significant number of deals, including certain investments still to complete.
- Mandatory notification requirement for share acquisitions upwards of 15% in a broadly defined set of sensitive sectors.
- UK government call-in power for transactions outside those sectors if they are considered to raise national security concerns, unless the transaction is voluntarily notified.
- This call-in power extends to asset acquisitions and shareholdings of less than 15% that confer “material influence” over a target.
- Transactions that have not completed by the date the regime comes into force (even if signed) could be subject to the mandatory notification requirement and be prevented from completing prior to clearance.
- The government will have retrospective jurisdiction to call in for review transactions potentially raising national security concerns that completed between 12 November 2020 and the date the regime comes into force.
- The regime is focused on national security rather than broader public interest review, and it is expected that only a small proportion of notified transactions will be subject to an in-depth review, remedies and/or restrictions.
- Possible criminal and civil sanctions for non-compliance.
For more information read our Client Alert.