The new law will give the UK government the power to:
- Stop, regulate and even undo any acquisition of any UK-based businesses or assets
- Require advanced notice and approval of all deals in 17 “sensitive” sectors
The law will:
- Allow the Secretary of State (SoS) to assess whether, and act if, a deal is a national security risk
- Require buyers in the sensitive sectors to seek approval
- Require notice for an increase in shareholding beyond 15%
- Encourage voluntary notice in other sectors
- Impose remarkable financial and criminal sanctions for non-compliance
Mandatory Disclosure Defined for Some Sectors
The sensitive sectors in which notice is mandatory are widely defined. They include advanced materials and robotics, AI, nuclear, communications, computer hardware, critical supplies to government, cryptographic authentication, data infrastructure, defence, energy, engineering biology, military, quantum satellite and space technologies, and transport, explain the advisers from Moore Barlow LLP, a member of ECOVIS International.
The new regime also applies to any assignment or licence of an asset (e.g., intellectual property, technology, or information) and any dealing with potentially strategic land. It applies wherever the asset is located, so long as it is used in an activity in the UK or to supply goods or services in the UK.
The test is whether the SoS is satisfied that they could pose a national security risk. There is no clear definition yet of what that means. If thought to pose such a risk, the SoS can stop or undo the deal or impose any conditions. For example, the SoS could order changes to the deal terms, or how the target operates.
Any Unauthorised Transaction Could Result in Fines
Where the mandatory notice regime applies and a transaction is completed before it is cleared, the transaction will be void and the parties can be subject to fines of up to the higher of 5% of worldwide turnover and GBP 10 million. Individuals may also be imprisoned for up to five years. Other penalties also apply for non-compliance with aspects of the review process.
For further information please contact:
Mark Lucas, Partner, Moore Barlow LLP – Member of ECOVIS International, Guildford, Surrey, UK
Email: mark.lucas@moorebarlow.com
Ecovis is a leading global consulting firm with its origins in Continental Europe. It has almost 8,500 people operating in nearly 80 countries. Its consulting focus and core competencies lie in the areas of tax consultation, accounting, auditing and legal advice.
The particular strength of Ecovis is the combination of personal advice at a local level with the general expertise of an international and interdisciplinary network of professionals. Every Ecovis office can rely on qualified specialists in the back offices as well as on the specific industrial or national know-how of all the Ecovis experts worldwide. This diversified expertise provides clients with effective support, especially in the fields of international transactions and investments – from preparation in the client’s home country to support in the target country.
In its consulting work Ecovis concentrates mainly on mid-sized firms. Both nationally and internationally, its one-stop-shop concept ensures all-round support in legal, fiscal, managerial and administrative issues.
The name Ecovis, a combination of the terms economy and vision, expresses both its international character and its focus on the future and growth.
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