The Government’s draft questions for National Security and Investment Notifications appear to meet their promise of a light touch regime but questions still remain.
The UK Government on 11th November 2020 published its long awaited National Security & Investment Bill (“the Bill”) which sets out radical new measures to protect the UK from malicious foreign investment and strengthen the country’s economic resilience. The Government’s proposed new regime updates the UK’s current powers contained in the Enterprise Act 2002 which are now almost 20 years old and which need modernisation to address the threats the UK faces in today’s modern world.
The main concern that leaps out from the wording of the Bill is its very wide scope. Despite the emphasis the Government places on controlling malicious foreign investment, the Bill in its current form would also require UK companies and persons entering into relevant investments in companies carrying on business in the UK or purchasing relevant assets with a UK nexus to be notified. There are also no exemptions or de minimis thresholds. On its face it does appear to be a case of over regulation by Government nervous at missing any transaction which they might want to vet.
According to the Impact Assessment on the legislation undertaken by Government up to 1,000 -1,800 transactions each year are expected to be notified. This is a considerable workload for the new Investment Unit set up to process the notifications. Anything short of a light touch and efficient notification system could lead to long delays, failed transactions or difficulty in timetabling the completion of international transactions. This may lead inward investors potentially shunning the UK as a friendly environment for investment.
The UK Government promised a light touch regime. Therefore, many commentators were interested in seeing the type and scale of information that the Government would be demanding from acquirers needing to make a notification.
The Government has recently published a draft list of questions which companies notifying would have to answer. Fear of an information overload has been averted. Some commentators had feared that the Government might be asking for very onerous level of detail akin to the CMA’s Merger Form. The form asks for details on:
- the parties, their corporate groups and their activities
- their directors
- details of the transaction
- the level of control or material influence the acquirer would assume following the transaction
- whether the goods or services are included on the Government’s lists of controlled products
There is a Section E where the parties are encouraged to provide additional details about the transaction which they think is relevant. It is not clear how much of a regulatory burden this free text box will pose to notifiers, whether it will be really voluntary or whether the onus will be put on parties to complete it in detail or otherwise risk a delay in the processing of their application.
The draft questions for the National Security and Investment notification form can be found here:
https://www.gov.uk/government/publications/national-security-and-investment-bill-2020
