New law to probe foreign takeovers to be unveiled this week
A new law which will enable ministers to scrutinise foreign takeovers of companies deemed of national importance will be published on Wednesday.
Sky News reported that the National Security and Investment Bill will list 17 sectors of strategic significance that will need governmental approval for transactions.
Sources told Sky that these would include nuclear energy, defence, artificial intelligence, robotics and communications.
In addition, it was reported that foreign bidders for companies in these sectors would be guaranteed a response to their offers within 30 days.
The mandatory notification element is an attempt to reassure overseas businesses that the UK is still an attractive destination for foreign investment after Brexit.
Last month it was reported that the government would also launch an “Office for Investment” to encourage foreign interest in infrastructure projects.
But these challenges are compounded by demands to increase scrutiny of companies taking over assets of strategic importance.
Over the summer increased concerns about the role of China in the UK’s telecoms networks culminated in state-owned Huawei being banned from the country’s 5G networks.
There has also been anxiety over what some see as the oversized role the same country currently plays in the UK’s civil nuclear programme.
Business secretary Alok Sharma has been working on the proposals alongside Downing Street for months.
According to the report, the new law will not identify individual countries that are of particular concern.
However, a dedicated unit will be stood up in order to oversee potential deals for companies and assets both physical and intellectual.
The bill was first announced in last December’s Queen’s Speech, which said that it would allow the government to “scrutinise investments and consider the risks that can arise from hostile parties acquiring ownership of, or control over, businesses or other entities and assets that have national security implications”.
The legislation has caused concerns among business and investor communities that the proposals will make the UK significantly unfriendlier to foreign investment at a time when its economy is already struggling due to the coronavirus pandemic, and months before it leaves the EU’s Single Market.
Under the current regime of the 2002 Enterprise Act, the government is already able to intervene where mergers and acquisitions raise any one of a number of specified public interest concerns, including national security.
City PM has contacted the Department of Businesses, Energy and Industrial Strategy for comment.