We've covered the National Security and Investment Bill (the Bill) extensively across a range of multimedia (including articles and videos) since it was first presented in Parliament on 11 November 2020.
As a reminder, the Bill will introduce a mandatory notification in 17 key sectors of the economy even if the transaction does not raise any national security issue (and starting from the acquisition of shares of voting rights above 15%). The Bill will also introduce a voluntary notification system for transactions in other sectors but only if they raise national security issues.
The same day the Bill was presented to Parliament, the Department for Business, Energy and Industrial Strategy (BEIS) issued a consultation on the definitions of the sectors subject to mandatory notification, which closed on 6 January 2021. The consultation received 94 formal responses; we were one of the 12 law firms that responded. The UK government published its response to the consultation on 2 March 2021.
A key concern raised by various commentators (including us) is that the Bill's definitions were too broad in scope and needed further specificity for businesses to understand whether they would fall within the mandatory notification system. There was also apprehension that some of terms used were ambiguous or unclear.
The government has decided to maintain the 17 sectors but has refined the definitions and introduced improvements and clarifications. But while there are some changes, many amendments appear to clarify rather than substantially modify the definitions. It is interesting to note that BEIS has stated that – although the consultation period is over – it will continue to engage with stakeholders to further modify the definitions (if possible).
Other comments relating more specifically to the Bill (such as introducing a de minimis threshold or a definition of national security) have not been taken on board, even though the government states that the mandatory notification sectors will be kept under review.
The Bill is progressing swiftly through Parliament and is currently at Committee stage in the House of Lords. If all goes smoothly – and there have been very few amendments so far – it's expected that the Bill will receive Royal Assent in May 2021. It will not enter into force until autumn, however, as there are several pieces of secondary legislation that are needed and which are listed in a document published by the government on 2 March 2021.
Despite statements by the government that the UK remains open for inward investment, if the Bill remains in its current form, it will present a hurdle for many acquisitions. Already, we're seeing clients concerned about the consequences of the Bill and several of them have already asked us to approach BEIS to seek guidance on whether their transaction would be captured by the Bill.
Please reach out to a member of our Competition, EU & Trade team if you’d like to discuss how the Bill will affect your business and investments in the UK.