The Government could be given new powers to scrutinise and intervene in M&A transactions deemed to raise national security concerns, under a draft Bill currently being debated in the House of Lords.
The National Security and Investment Bill would introduce an independent screening regime in the UK where a transaction involving a change of control of a UK entity or asset may have the effect of jeopardising UK national security interests.
The rules would require investors and parties to a broad range of transactions to determine if the regime applies and to make any required mandatory notification.
The new law would require a purchaser who is proposing to acquire a “qualifying entity” in one or more of 17 specified “sensitive sectors” to inform the Secretary of State of the transaction. The regime would apply equally to foreign investment as well as UK buyers and investors.
Notifiable transactions cannot be completed unless clearance is given, or the transaction would be void.
Transactions deemed not to be notifiable or within a sensitive sector may still be submitted for clearance on a voluntary basis.
The draft legislation also details new powers for the Secretary of State to review, impose conditions or block transactions which may pose a risk to the national security of the UK.
The Bill is currently being examined by Parliament. If passed, it is expected to take effect later this year. However, under the draft provisions, the law would apply retroactively to all transactions since 12 November 2020 which are caught by the new rules.