European countries are paying increasing attention to FDI regulation. The UK is preparing to toughen the conditions for foreign investors' access to the domestic market as well. British government has developed a draft law "On ensuring national security and investment", which gives the country's authorities additional powers to prevent "suspicious" transactions. This may include, among other things, access to critical infrastructure. The draft document has already been submitted to the country's parliament. In this review, we will analyze the innovations in the regulation of M&A transactions in the UK in the light of recent events.
Company registration in the UK: legislative innovations
As part of the fight against the consequences of COVID-19, the government can now intervene in transactions on the grounds of public health emergencies. These powers will extend to enterprises related to the public health system. These can be companies involved in food supply chains or providing logistics or telecommunications services.
The scope of M&A oversight has also expanded with respect to a new list of deals in high-tech industries such as AI, cryptographic authentication and advanced materials.
If you would like to register a company in the UK and operate in the above industries, familiarization with the new FDI regulations is mandatory. The updated requirements may also apply to the acquisition of minority stakes by foreign investors.
The government announced plans to tighten control not only over UK M&A deals involving foreign investors, but also over their purchases of assets and intellectual property in a number of "sensitive sectors" - from the military and energy, quantum technologies to solutions based on artificial intelligence and robotics. It is assumed that transactions in these areas will require mandatory notification, and the responsible agency will be empowered to block them if necessary.
Following these changes, the regulatory bodies may investigate transactions in sectors where:
- annual turnover in the UK exceeds 1 million pounds;
- targeted supply and goods procurement has a share of at least 25% in the United Kingdom.
State intervention is possible where potential public interest implications have been identified.
The country's authorities intend to carefully study the FDI and consider the risks that may arise from the conclusion of merger deals in the UK.
According to government forecasts, at least 200 statements of intent to conclude a deal on mergers of companies in the UK will come from foreign businessmen. Approximately half of them will have to undergo an extended national interest check. The authorities have the power to prohibit such transactions or even cancel them after they have been completed. So potential buyers have no choice but to take these measures seriously in preparation for the merger application.
If you have any questions about this topic, you can order a consultation on the regulation of M&A transactions in the UK in light of the latest legislative changes.