The UK Government today announced that it will be modernising powers to investigate and intervene in potentially hostile direct investment on national security grounds. The National Security and Investment Bill will strengthen the Government’s ability to respond to mergers, acquisitions and other types of deals that may threaten national security. This follows proposals in the Queen’s Speech 2019 and a White Paper in 2018 on updating the UK’s investment screening regime.
If passed into legislation, the new powers will require investors and businesses to notify the Government of transactions in designated sectors, including defence, transport, satellite and space technologies, as well as other critical suppliers to Government and the emergency services. The Bill will also extend the Government’s screening powers, with proposed transactions assessed within 30 working days. Finally, it will also create new powers to impose conditions to address risks, sanctions for non-compliance, and mechanisms for legal challenge. This regime will be divorced from competition regulation.
The Bill comes against the backdrop of changes to investment screening regimes in many other Western countries, including the USA, Canada, and Australia. The UK has a historically open inward investment regime, which generates significant prosperity and jobs across the UK. However, as global threats have developed, and technologies have advanced the UK now seeks to strengthen its arrangements. The plans for an new Investment Screening Unit also sit alongside the welcome announcement of the new Office for Investment, which has been tasked by the Prime Minister to land high-value investment opportunities in research and development, infrastructure, and clean technologies.
The industries that ADS represents will support specific legislation to protect strategic national capabilities from hostile takeovers. Companies in our aerospace, defence, security, and space sectors are developing innovative new technologies in the UK with the potential to make a long-term contribution to our national prosperity, but critical technologies must be protected from hostile takeovers. However, the Government’s plans must strike an appropriate balance between putting protections in place and continuing to ensure the UK remains an attractive environment for international investment.
Having made a submission to the 2018 White Paper ADS looks forward to contributing to forthcoming consultations on the National Security and Investment Bill, including on the mandatory notification regime. ADS is keen to work with the Government to create a predictable and smooth notification, assessment, and appeals process that strengthens national security while also maintaining a welcoming investment environment for the years to come.