Law passes to give UK government enhanced screening powers for M&A tech deals
The National Security and Investment (NSI) Act is in power from at this time (Tuesday 4 January 2022), giving the UK government enhanced powers to scrutinise and halt tech-related acquisitions that might doubtlessly pose a threat to nationwide safety.
The Act is billed as the most important overhaul of the UK nationwide safety screening regime for 20 years, and makes it necessary for the Department for Business, Energy and Industrial Strategy (BEIS) to be notified of sure acquisitions in 17 tech-heavy industries earlier than the deal completes.
Failing to achieve this may end in any acquisitions that proceed with out prior approval being declared void, and may additionally lead to the acquirer being hit with civil or felony penalties, the government warns.
To keep away from this, the onus is on traders and the companies concerned in these transactions to flag the acquisitions to BEIS, with the sectors lined by its scope together with information infrastructure, synthetic intelligence, communications, computing {hardware} and quantum computing, to title a couple of.
“The NSI Act will give investors additional certainty and clarity, and cement the UK’s world-leading reputation as a global champion of free trade and investment, as well as an attractive place to invest, with more transparency and more simple, efficient clearance processes for relevant acquisitions,” mentioned the government, in an announcement.
The government mentioned it anticipates the “vast majority” of acquisitions inside the Act’s scope would require no intervention and can proceed to completion at once, and with “certainty in the knowledge the government will not revisit a transaction once cleared unless false or misleading information was provided” about it.
As reported by Computer Weekly, considerations have beforehand been raised by market watchers that – on account of the Act coming into power – it may have a “chilling effect” on the tempo of acquisitions within the 17 sectors it covers.
Business Secretary Kwasi Kwarteng mentioned the Act is designed to assist easy the best way for acquisitions to proceed, somewhat than maintain them up.
“The UK is world-renowned as an attractive place to invest, but we have always been clear that we will not hesitate to step in where necessary to protect our national security,” he mentioned.
“The new investment screening process in place from today is simple and quick, giving investors and firms the certainty they need to do business, and giving everyone in the UK peace of mind that their security remains our number one priority.”
The government has printed a sequence of guidance documents to help investors negotiate the contents of the Act, and to help them with ascertaining whether or not any acquisitions they’re planning to embark upon are notifiable underneath its phrases.
Acquisitions are thought-about notifiable if they didn’t full earlier than 12 November 2020, which is the day after the NSI Bill was launched to Parliament.
Notifiable acquisitions should additionally contain a UK-based “qualifying entity” that operates in one of many 17 affected sectors, and end result within the investor buying a stake within the firm that exceeds 25%.
