Wed, 11 Nov 2020 | BUSINESS NEWS
The UK Government has revealed new legislation that would allow it to intervene to block takeovers and other deals that threaten national security. The National Security and Investment Bill will cover 17 sectors considered to be of national importance and potentially sensitive, including defence, energy and artificial intelligence.
The bill will give ministers powers to scrutinise deals and intervene in “malicious” foreign deals for UK companies within the sectors. The bill follows long-standing fears that certain details could compromise the UK’s security or infrastructure.
It has been reported that there will be a dedicated unit established for the purpose of scrutinising potential acquisitions, including company takeovers and asset and intellectual property sales, in the relevant sectors. Sources have indicated this will be aligned with the other countries in the “Five Eyes” security partnership.
Business Secretary Alok Sharma said: “Hostile actors should be in no doubt – there is no back door into the UK. This bill will mean that we can continue to welcome job-creating investment to our shores, while shutting out those who could threaten the safety of the British people.”
In an effort to quell concerns that the new rules may adversely impact dealmaking, the government has said it will guarantee bidders on companies in the sectors a response to their proposed deals within 30 days and that the vast majority of deals would be approved without intervention. The law will clarify that national security will be the only ground for government intervention in a proposed deal.
A consultation process is soon to be underway and the restrictions are set to come into effect as soon as the Bill has been published, reportedly in an effort to ensure there isn’t a wave of deals being rushed through during the legislative process.
While individual countries have not been specified in the legislation, the bill comes amid increased concern over the role of Chinese companies. In recent years, the UK has acted to block Chinese firm Huawei from its 5G mobile networks from 2027 over spying concerns and delayed a 2016 nuclear power project over Chinese state funding.
Last week, the government confirmed that new powers would not extend to taking retrospective action to reverse previous foreign takeovers. Business Minister Nadhim Zahawi said: "Any retrospection on deals would send the wrong message. Our priority is to make sure that we send a message to the world that we are open for business."
Firms failing to comply with the laws could face fines or even potential jail time for company executives, while any deals where notification of the authorities is deemed mandatory will be declared void if procedures are not adhered to.
In full, the sectors which will require mandatory notification for potential deals are: civil nuclear; communications; data infrastructure; defence; energy; transport; artificial intelligence; autonomous robotics; computing hardware; cryptographic authentication; advanced materials; quantum technologies; engineering biology; critical suppliers to government; critical suppliers to the emergency services; military or dual-use technologies; satellite and space technologies.
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