The new legislation is designed to monitor investments in companies and assets in the
New Obligations
Companies covered by the new legislation are those in sectors1 such as defence, energy, communications, transport, satellite and space but also artificial intelligence, data infrastructure, cryptographic authentication and quantum technologies. Other companies with activities critical to
Investments require prior government clearance if they cross the 25%, 50% or 75% thresholds of share capital or voting rights or if the investor is granted veto rights over a company's affairs. There is no general minimum turnover or transaction value criteria except in limited circumstances.
Transactions completed without clearance will be void and attract heavy turnover-based fines (up to 5% of worldwide group turnover with a floor at Ł10 million) as well as criminal liability for directors (up to 5 years imprisonment). Transactions found to be contrary to national security may be blocked or permitted under conditions (such as segregation of sensitive businesses or IP).
Other investments may be filed for clearance on a voluntary basis if the investor makes certain asset acquisitions (such as land or IP), acquires material influence over a company (which may be as little as 15%) or invests in companies with activities relevant to
Key Principles
The new legislation aims to provide the
Clearance and Call-in Powers
The clearance process begins with a filing. The secretary of state for Business, Energy and Industrial Strategy2 then has 30 working days to decide whether to review the transaction and a further 30 working days to conduct its review, which may be extended by a further 45 working days or more. Voluntary filings jump directly to the 30 working day review.
The secretary of state may call-in for review any transaction qualifying for voluntary clearance and investigate any past transaction within 5 years of completion or 6 months of becoming aware of it.
Going forward, it is essential to factor in compliance with this new regime in deal timelines (e.g. as a condition precedent to completion).
The Act
The new regime will apply from
Footnotes
[1] Draft regulations of
[2] A new dedicated team within the
[3]
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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