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National Security and Investment Bill

The Bill seeks to introduce change in a number of areas and it is important to understand why this may be important to you, particularly, if your business relies on foreign investment.

With the upcoming shift in law we are expecting to see a more invasive governmental intervention into private merger and acquisition deals with the introduction of a hybrid notification system as well as the ability to issue call up notices on completed deals going back as far as 5 years.


The National Security and Investment Bill (the “Bill”) is currently subject to parliamentary debate and amendment with the overriding purpose of the legislative change being to strengthen the Government’s powers, to scrutinise and intervene in business transactions (takeovers and mergers), to protect national security; and, provide businesses and investors with the certainty and transparency they need to do business in the UK.

It is vital that advisors become familiar with the upcoming changes in this area and the possible ramifications which may stem from the failure to notify.

Current regime

As it stands, the UK currently relies on the provisions of the Enterprise Act 2002 as a legislative basis to examine mergers and acquisitions for the purposes of national security and other areas of public concern which provides for Government intervention on public interest grounds in public interest cases, special public interest cases and European merger cases.

The current regime has been deemed unsatisfactory and out of sync with foreign investment regime provisions. The introduction of the Bill attempts to fill in the gaps found within the UK’s permissive approach to foreign investment.

How the change might affect you

The Bill seeks to introduce change in the following areas:

  • Call In Notices – Secretary of State (SoS) is expected to be given powers to scrutinise specific acquisitions by issuing “call in notices” if certain “trigger events” occur. The SoS may issue a call-in notice up to 5 years after a “trigger event” has taken place, so long as that 5 year period does not reach back before the introduction of the Bill.
  • Mandatory Notification – a mandatory notification requirement is being considered for acquisitions of certain shares or voting rights which are termed “notifiable acquisitions”. The proposed acquirers will have an obligation to notify the SoS of the acquisition before it takes place in order to obtain clearance to proceed.

    An obligation for advisors to bring this to their clients’ attention is likely but not yet certain.

    Possible ramification of failure to notify – (1) acquisition is deemed void and has no legal effect and/or (2) criminal penalties and/or (3) civil penalties.

    Possible remedies of failure to notify – the SoS may grant retrospective consent.

    Clear regulations in this area are to follow.
  • Voluntary Notification – if the criteria for mandatory notification is not met a voluntary notification may be submitted if the acquirer believes their acquisition or “trigger event” could raise national security concerns.

Further, more detailed information in regards to “trigger events”, “notifiable acquisitions” and mandatory notification requirements will follow once the status of the Bill becomes more certain.

Liliana Armitage

Author Liliana Armitage

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