Thu, Nov 12, 2020 page10

• UK unveils law to protect assets from foreign buyers

  • Bloomberg
  • • 
    • 
    • 

  The UK plans sweeping powers to intervene in foreign takeovers of British assets if deemed a threat to national security.

  A draft law, published yesterday, would expand the range of transactions open to government intervention, the UK Department for Business, Energy and Industrial Strategy said.

  There would be scope for fines and retroactive interventions in deals that complete after the bill’s publication — a potentially controversial provision that critics said could deter investors.

  The proposed legislation covers sectors including defense, energy and transport, as the government seeks to stop British companies, infrastructure and intellectual property falling into “hostile” ownership.

  At the same time, the department said the new scrutiny process would be “slicker” than at present, by imposing set timeframes within which ministers must come to a decision.

  “The UK remains one of the most attractive investment destinations in the world and we want to keep it that way,” British Secretary of State for Business, Energy & Industrial Strategy Alok Sharma said in a statement. “But hostile actors should be in no doubt — there is no backdoor into the UK.”

  Under the National Security and Investment Bill, foreign buyers from all countries purchasing British assets in 17 sectors would be obliged to notify the government of the transaction.

  Only some deals in those sectors would be covered, and a separate consultation would determine the full scope of the law.

  Ministers would then have 30 days to either allow a transaction to proceed or call it in for further scrutiny on national security grounds.

  If that path is chosen, the business secretary would have a further 30 days to make a decision, extendable by another 45 days in the most complex cases.

  Punishments for non-compliance with the new regime includes five years imprisonment and fines of as much as 5 percent of global turnover or ￡10 million (US$13.3 million) — whichever is greater.

  Transactions subject to mandatory notification that take place without being cleared would be legally void, the department said.

  Conditions imposed on sensitive deals could include limits on the size of shareholdings by foreign investors, restrictions on access to commercial information and limits on access to certain projects, it said.

  The department has in the past also imposed conditions on pensions and investment.

  Once a deal is cleared, ministers would not be able to revisit it — unless inaccurate information was provided.

  However, as reported last month by Bloomberg, there are some retroactive elements to the legislation.

  Ministers would have five years to scrutinize transactions in the wider economy beyond the 17 sectors.

  They would have powers to unpick them if they are judged a threat to national security — a provision the government said is in line with French, Italian and German practice.

  The retroactivity would apply from yesterday, so the government would not be able to intervene in already completed deals.

  The department estimates that more than 1,000 deals a year might be subject to the new notification requirement, with 70 to 95 called in for further scrutiny and about 10 requiring some sort of remedy.

  Until now, interventions have been governed by the 2002 Enterprise Act, which allows government action when a proposed merger would affect media plurality, national security or public contracts.

  The department made changes in 2018, which removed thresholds on market share and turnover for some companies, but the new draft legislation would apply across all sectors.
• Most Popular

  • 1

    Taiwan aiming to be major UAV player

  • 2

    Seven NT$10 million receipt prizes unclaimed

  • 3

    Ministry to retaliate in naming spat with S. Korea

  • 4

    Taiwanese officials shown 1st F-16V jet due this year

  • 5

    MRT Red Line extension, Sanyin Line to open in June