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NATIONAL SECURITY AND INVESTMENT BILL 2020: New Regime for Foreign Investment in UK Introduced (B2+)

[Para 1] On the 11th November 2020, the United Kingdom government introduced the National Security and Investment Bill 2020 to the UK parliament. The Bill is expected to become law in the spring of 2021. However, some of its key provisions are already in effect through a retrospective review process.


[Para 2] The measures are significant, because they give the UK government wide-ranging powers to both scrutinise and intervene in a range of business transactions on the basis of ‘national security’. Any foreign investors, and their legal advisors, seeking to acquisitions or business expansion opportunities in the United Kingdom should be aware of these new provisions.


[Para 3] The Bill gives the Secretary of State for Business, Energy and Industry Strategy (BEIS) powers to screen investments and scrutinise transactions for certain national security risks.


[Para 4] Some key features of the proposed legislation include:


· Establishing (from early 2021) a mandatory filing and pre-approval regime if a business entity is active in one of 17 specified ‘sectors. These sectors include civil nuclear, defence, Artificial Intelligence, energy, and transport. This includes any transaction where minority shareholdings in an entity will be 15% or more

· Establishing a voluntary notification system for transactions in the UK which may raise security concerns

· Powers for the Secretary of State for BEIS to ‘call in’ a range of transactions in order to carry out a national security assessment, even if these transactions have not been notified

· Powers for the Secretary of State for BEIS to impose remedies to address national security concerns. Sanctions, in the form of financial penalties and criminal liability for directors for non-compliance also form part of the new regime. The financial penalties are significant; up to 5% of total worldwide turnover or £10 million, whichever is higher.


[Para 5] Any foreign investors, and their legal advisors, considering investment in the United Kingdom will certainly have to consider these new provisions very carefully. They would be well advised to ask whether a proposed or potential transaction might raise UK national security issues and also consider proactive engagement with the UK government.


[Para 6] It seems clear that these new provisions will add more regulatory burdens to investing in the United Kingdom in certain areas. It will also mean more complex risk assessments, and potentially create delays in relation to transaction deadlines.


Glossary

Bill – Legislation (Acts of Parliament/statutes) begin their life as ‘Bills’. Once a Bill has passed through parliament, and is signed by the reigning monarch, it becomes an Act of Parliament (it is enacted).



EXERCISE

1. To look back at something that has happened in the past. [para 1]

2. Covering a large scope or including a lot of things [para 2]

3. To look very carefully and thoroughly at something [para 2]

4. To evaluate or assess something to see it if is suitable. [para 3]

5. Something that you must do because someone in authority has said so. [para 4]

6. A body or organisation which has its own independent existence. [para 4]

7. Solutions to problems. [para 4]

8. To create or control a situation rather than just responding to it. [para 5]

9. Something, such as a requirement, which is not easy to carry or bear. [para 6]

10. Times (a day, date, or time) when something must be done or finished by. [para 6]




ANSWER KEY

1. retrospective

2. wide-ranging

3. scrutinise

4. screen

5. mandatory

6. entity

7. remedies

8. proactive

9. burdens

10. deadlines



[Note: This article is intended to be study material only. It is not intended to be an authoritative statement of the law. If you need legal advice, you should always consult an appropriate lawyer]


© Cambridge Legal English Academy 2020

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