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14 Dec 2020

The UK introduces audacious new National Security and Investment Bill

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Key points to take away from this briefing:

  • The NSIB creates for the first time a standalone review system of foreign direct investment in the UK which will be entirely separate from the existing UK merger control regime.

  • Transactions concerning certain key industries and sectors will be subject to a mandatory notification requirement to the Department for Business Energy and Industrial Strategy (the Competition & Markets Authority will not undertake reviews under the NSIB).

  • The Government will also have discretionary powers to “call in” those transactions which fall outside of these key sectors if it still considers there to be potential national security concerns. Parties involved in such transactions can choose whether or not to voluntarily notify the transaction. However, the limitation period for the Government’s “call in” power is 5 years, meaning any strategic decision taken not to make a voluntary notification will be subject to a high degree of uncertainty for a significant time period.

  • There are significant penalties for any failure to make a mandatory notification, including fines of up to 5% of a company’s annual global turnover or £10 million (whichever is the higher) and up to 5 years imprisonment for individuals.

  • Though the NSIB is not expected to become law until mid-2021, it will nonetheless apply retrospectively to any transactions commenced on or after 12 November 2020.

  • In future, parties will be faced with more additional complexities and costs for UK transactions. As such, parties should assess early whether a deal will be subject to a mandatory or voluntary notification and factor the NSIB into all aspects of deal-planning (e.g. timetable, drafting of key clauses).

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