Law passed to give UK government stronger screening powers for M&A tech deals
The National Security and Investment Act (NSI) is in effect from today (Tuesday, January 4, 2022), giving the UK government increased powers to review and stop technology-related acquisitions that could potentially present a risk to national security.
The law is touted as the biggest overhaul of the UK’s national security screening regime in 20 years and requires the Department for Business, Energy and Industrial Strategy (BEIS) to be made aware of certain acquisitions in 17 technology-intensive industries before the case ends.
Otherwise, any acquisition made without prior approval could be declared void and could also result in civil or criminal penalties for the purchaser, warns the government.
To avoid this, it is incumbent on the investors and companies involved in these transactions to report acquisitions to BEIS, the sectors covered by its scope including data infrastructure, artificial intelligence, communications, IT hardware and l quantum computing, to name a few.
“The NSI Act will give investors additional certainty and clarity, and solidify the UK’s leading global reputation as a global champion of free trade and investment, as well as an attractive place to invest, with more transparency and simpler and more efficient customs clearance processes for relevant acquisitions, âthe government said in a statement.
The government has said it expects that the “vast majority” of acquisitions within the scope of the law will require no intervention and will be completed without delay, and with “the confidence that the government will not reconsider a transaction once. authorized unless false or misleading information is provided âabout it.
As Computer Weekly reported, market watchers have previously expressed concerns that – due to the coming into force of the law – this could have a “chilling effect” on the pace of acquisitions in the 17 sectors that it is making. ‘she covers.
Business Secretary Kwasi Kwarteng said the law is designed to facilitate acquisitions, rather than delay them.
“The UK is globally recognized as an attractive place to invest, but we have always been clear that we will not hesitate to step in if necessary to protect our national security,” he said.
“The new investment screening process in place from today is quick and simple, giving investors and businesses the certainty they need to do business, and giving everyone in the UK the peace of mind of mind that their safety remains our number one priority. “
The government has released a series of guidance documents to help investors negotiate the content of the law and to help them determine whether acquisitions they plan to initiate are reportable under its terms.
Acquisitions are considered to be subject to notification if they have not been completed before November 12, 2020, i.e. the day after the draft law on the INS is tabled in Parliament.
Acquisitions to be notified must also involve a UK-based ‘qualifying entity’ that operates in one of the 17 relevant sectors, and result in the investor acquiring a stake in the company greater than 25%. .