The UK’s government intends to amend the proposed National Security and Investment Act. Doing so would greatly reduce the burden on foreign companies planning to purchase stakes in British assets. For this reason, many observers expect this amendment to have a positive effect on the UK’s economy and business climate.
According to the proposed amendment, any prospective buyer of British assets from abroad must notify the government if the stake in question is at 25% or more. In the existing draft bill, the lower limit for such a requirement is 15%.
This amendment will receive further discussion after it returns to the House of Lords for its report stage. The further discussion will take place on April 15.
The National Security and Investment Act will also provide the government with several different powers. However, the government may only use these powers in the event of a takeover which threatens the country’s national security.
There are two primary purposes to this Act and its amendment. The first is to help the UK’s economy emerge from a dire recession. Like many others around the world, this recession stems from the effects of the Covid-19 pandemic. The Act and amendment also supposedly promote the benefits of investing in the UK. Ever since “Brexit” – the departure of the UK from the European Union last year – some foreign investors have been wary about investing in the country.
According to Secretary of State for Business, Energy and Industrial Strategy Kwasi Kwarteng, the primary purpose of the amendment is to protect British assets while at the same time encouraging foreign investment in the UK.
In a statement, the Department for Business, Energy and Industrial Strategy said, “This change will ensure the new regime is proportionate and as transparent as possible without reducing the government’s intervention powers.”
The Department added, “(The National Security and Investment Act) will strengthen the UK’s ability to investigate and intervene in mergers, acquisitions, and other types of deals that could threaten our national security. The overwhelming majority of transactions will be unaffected by these new powers.”
The amendment would affect a variety of economic sectors. Among the most notable of these are transport, defense, and energy. With the amendment, the British government intends to protect British companies, infrastructure, and intellectual property, especially in those industries, from entering the hands of “hostile” foreign owners.
It will also accelerate the scrutiny process through the imposition of certain timeframes. Within these timeframes, ministers must reach a decision related to the takeover in question.
According to the original plans, the government expected around 1,830 deals every year to be “notifiable”. A notifiable deal is one which requires prospective buyers to notify a special Department for Business, Energy and Industrial Strategy unit. This unit will then analyze and decide upon the proposed transaction.
13th April 2021 14:55
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