Skip to content

8 February, 2023

Subscribe Advertise About Us
  • My Account
  • Register
  • Log In
  • Log Out

Board Agenda

  • Governance
  • Strategy
  • Risk
  • Ethics
  • News
    • Categories

      • View All
      • Board Moves
    • CEO legacy

      Long-standing CEOs can leave a legacy of trouble for boards

      Performance and productivity can suffer after a long-tenured chief executive leaves the company, researchers find.

    • cost-of-living crisis Aviva highlights cost-of-living crisis

      Fund calls for ‘mindful’ pay ratios, showing executive pay is now firmly an issue for...

    • diversity talent pipeline News round-up: this week in governance

      Target diversity early; directors job market 'ossified'; US extends duty of oversight; 'kindness bias' hinders...

  • Insight
    • Categories

      • View all
      • Governance
      • Strategy
      • Risk
      • Ethics
      • Board Expertise
      • finance
      • Technology
    • mission zero

      Can the UK achieve net zero by 2050?

      To gain economic benefits, UK businesses will need resilient and flexible supply chains to provide...

    • governance recession

      What use is governance in a recession?

      Companies seeking competitive advantage in uncertain times will find that effective governance allows much sharper...

    • climate litigation

      Climate litigation: how 2022 will shape 2023

      This past year saw a rise in climate litigation, with a focus on the commercial...

  • Comment
      • View all
    • A week of business moving to the centre of human rights

      A week of events signals the initiatives underway to have companies play a central role...

    • audit reform IIA Why we need audit reform right now

      There is an "urgent need" for reform to the audit landscape as well as internal...

    • climate change energy crisis Sustainability and climate change: the other energy crisis

      The world is addicted to cheap energy. We need to admit this and have the...

  • Interviews
      • View All Interviews
      • Podcasts
      • Webinars
    • Board priorities 2023 Board priorities 2023: tact, trust and transparency

      We asked key figures what would help boards this year. The answers ranged from 'smarter...

    • Group of investors/shareholders in glass building Climate issues likely to figure prominently at next year’s AGMs

      A recent webinar heard that say-on-climate voting is expected to rise, while ESG remains a...

    • NEDs role NEDs ‘needed more than ever’ in times of uncertainty

      The non-executive director’s role is to both challenge and listen to management, agreed the panel...

  • Careers
      • View all
      • Selection
      • Board Moves
    • CEO legacy Long-standing CEOs can leave a legacy of trouble for boards

      Performance and productivity can suffer after a long-tenured chief executive leaves the company, researchers find.

    • diversity talent pipeline News round-up: this week in governance

      Target diversity early; directors job market 'ossified'; US extends duty of oversight; 'kindness bias' hinders...

    • NED recruitment News round-up: this week in governance

      Your country needs NEDs; governance does not compute; financial firms get more women on board;...

  • Resource Centre
      • White Paper Downloads
      • Book Reviews
      • Corporate & Advisory Services
    • Edelman Trust Barometer 2023

      2023 Edelman Trust Barometer

      The report is the result of the Edelman Trust Institute's research, which sampled more than...

    • Sophos 2023 Threat Report

      Barriers to entry for would-be cybercriminals are lower, with tools and tactics becoming available to...

    • The C-Suite Outlook 2023: On the Edge

      The Conference Board 2023 C-Suite Outlook survey reveals the events that C-suite executives see as...

  • Events
  • Search by topic
    • Governance
    • Strategy
    • Risk
    • Ethics
    • Regulation
    • ESG
    • Investor Relations
    • Selection
    • Board Expertise
    • finance
    • Technology

UK seeks powers to block foreign investment on national security grounds

by Gavin Hinks on November 12, 2020

The proposed Bill will present a potential hurdle for boards looking at investment or acquisition from an overseas suitor.

Puzzle pieces in a cityscape

Image: NESPIX/Shutterstock

Just as observers expect M&A activity to spike because of the pandemic, the government has announced it intends to push ahead with introducing new powers that will allow foreign investment to be blocked on national security concerns.

Driven in part by the increasing investment activity emanating from China, the Bill introduced in Parliament this week will apply to investments originating from any country. It will give deal teams and boards pause for thought and present new considerations when looking at investment or acquisition from an overseas suitor.

According to business secretary Alok Sharma, the new measures update existing powers which are now 20 years old and do not “reflect threats we face today”.

“The UK remains one of the most attractive investment destinations in the world and we want to keep it that way. But hostile actors should be in no doubt—there is no back door into the UK,” says Sharma.

The new rules mean investors and business will have to notify the government through an online portal about transactions in sensitive sectors such as defence, energy and transport. Screening powers will enable the government to scrutinise not only the acquisition of companies but also the acquisition of key assets and intellectual property.

There are some obvious sectors placed under a spotlight by the news rules including nuclear power military, satellite and space technologies. But the government also has worries about deals in artificial intelligence, robotics, quantum tech and bioengineering.

Global restrictions on foreign investment

The UK is not alone in applying national security considerations to foreign investment. In 2018 the US introduced the Foreign Investment Risk Review Modernisation Act expanding the reach of the Committee on Foreign Investment in the United States (CFIUS).

A year before that the European Commission proposed new rules to screen deals and investments in EU member states.

In 2017 Germany, the EU’s most influential state, took its own steps to impose a mandatory notification requirement for all non-EU investments. In 2018, the German Ministry of Economic Affairs and Energy blocked two deals involving Chinese investors on national security grounds.

According to Nicole Kar, head of competition at law firm Linklaters, the proposed legislation appears to draw on the experience of both the US and Germany. She says overseas investors will face more complexity as the new legislation allows regulators to call in transactions retrospectively.

She says the Bill is a “step change” in government enforcement powers and also reflects how governments are willing to put a cordon around technology to protect it, especially at a time when Covid-19 may be driving increased investment activity.

“The Bill gives the government the power to scrutinise a broad swathe of M&A activity with any UK nexus,” says Kar. “We therefore anticipate that foreign investment rules, both in the UK and internationally, will be an increasingly onerous consideration for overseas investors planning international transactions.”

  • Facebook
  • Twitter
  • Google+
  • LinkedIn
  • Mail

Related Posts

  • UK green finance report puts focus on transition plans
    October 20, 2021
    Rishi Sunak, Chancellor of the Exchequer

    Chancellor Rishi Sunak says requiring firms to disclose transition plans would help the UK to “set new global standards for sustainability”.

  • Directors need to ‘up their game’ on ESG strategy
    April 4, 2022
    Board members looking at corporate reports

    Study says 70% of board directors say they are “not at all” or only “moderately“ effective at integrating ESG concerns into company strategy.

  • Are UK corporate governance rules leading to market malaise?
    January 14, 2022
    Share listings board

    A recent article argued the UK needs "more directors who understand risk-taking, not virtue signalling" if London is to regain its status.

  • Investment managers hesitant to embrace ethics as part of ESG
    March 21, 2022
    Business ethics on cogs

    Study finds investors shy away from direct talk of ethics, but some are assessing company culture as an indicator of ESG performance.

For thoughtful journalism, expert insights on corporate governance and an extensive library of reports, guides and tools to help boards and directors navigate the complexities of their roles, subscribe to Board Agenda

foreign investment, foreign takeovers, investors, legislation, M&A, UK, UK law

Search


Sign up to our Newsletter

Receive independent news, thoughtful journalism & expert insights about leadership, corporate governance & key boardroom issues straight to your inbox every week.

SIGN UP

Follow Us

 

 

 

 

Most Popular

  • Investors favour votes against directors over say-on-climate proposals
  • Shell overhauls its board
  • ESG grows in importance as driver of M&As
  • What use is governance in a recession?
  • News round-up: this week in governance
 

Featured Partner Profile

Diligent

Diligent

Diligent Corporation, which was founded in 2001, is headquartered in New York, NY with a European HQ in London. Diligent’s modern governance platform empowers leaders and teams at every level of the organisation to digitally transform and create ...

Featured Partner Resources

2022 AGM Season Forecast: An Eye on The Horizon

To help prepare for AGMs in 2022, Equiniti (EQ) hi...

Stakeholder Engagement: A Roadmap for UK Plc Boards

This guide aims to provide directors and their col...

Digital Boards: How Technology Adoption is Driving Culture Change and Resiliency

Digital tools proved their worth to boards during ...
Leadership in AI report

Leadership in AI

This report from Board Agenda and Mazars, in assoc...
Creativity in a Crisis: a Boardroom Map for Innovation

Creativity in a Crisis: a Boardroom Map for Innovation

In the uncertain times at the height of any crisis...
Board Directors Guide to D&O Liability Insurance - November 2020 - AIG & Board Agenda

Board Directors' Guide to D&O Liability Insurance

Directors face liability over a range of new threa...
Leadership-in-Risk-Management-Board-Report

Leadership in Risk Management: Board Report

Board Agenda, in association with Mazars and INSEA...
Director's Guide to Internal Investigations

A Director's Guide to Conducting Internal Investigations

An internal investigation must be handled meticulo...

 


 

ADVERTISE – FREE CORPORATE LISTING

FREE - Add your company profile to our Corporate & Advisory Directory.
ADD

ADVERTISE – PROMOTE YOUR REPORTS & WHITEPAPERS

FREE - Add your company profile to our Corporate & Advisory Directory.
Add Resource

Register Free

Register to receive free article views, selected resource downloads, and all the latest news alerts straight to your inbox. Register


  • Editors & Contributors
  • Editorial Advisory Board
  • Corporate & Advisory Services
  • Media Marketing Solutions
  • Contact Us
  • Careers
  • Board Director Network
  • Terms & Conditions
  • Privacy Policy
  • Cookies
  • Sitemap
|