The set of new proposals prepared by the British government which have been created for better protection of some of the most important business sectors and the technically advanced businesses, the British government is set to give more power to its ministers across all ministries which will allow them to prevent foreign takeovers on the grounds of national security.
At present the scope of the current laws is limited to large transactions and certain specific industries including defence and the business secretary, Greg Clark, desires to enhance the reach of the current system so that is able to encompass all UK firms – including smaller businesses in an effort to keep foreign takeover away from vital firms and technologies.
Under the new proposal, ministers would have the power to stop or undo a takeover and would include the sale of the even smallest asset on eth grounds of national security if deemed proper. The proposals will have to go through a period of 10 of consultation.
Chinese and Russian takeovers of defence-related industries are likely to be the primary target of the new regulations. At the top of the list of the ministers related to national security would also include technology companies – including cybersecurity businesses, which has existing relation with the Ministry of Defence, or are considered to be critical for the development of the financial and commercial defence systems of the UK.
Last year, acquisition of the handset maker Sepura by the Hytera Corporation of China worth £74m was allowed by Clark. That was just the second occasion of reviewing of a takeover on grounds of national security in the last 18 months. Concerns were raised this month about the transaction involving the Northern Aerospace being sold to a Chinese buyer by the MoD. Later the Northern Aerospace transaction was cleared by the Competition and Markets Authority.
Under the proposals, buyers and sellers will be under no obligation to notify civil servants of a purchase, but face five years in jail if they are found guilty of infringing the new regime.
A review can be triggered by the sale of 50% of an asset or 25% of shares in a business if one finds any national security concerns. Software designs, manufacturing processes or intellectual property would be included in an asset.
Under the new rules, consideration of 200 cases are year by the civil servants is expected by the Department for Business, Energy & Industrial Strategy (BEIS). That would lead to 100 formal reviews and among that number there is expected to be 50 cases of remedies which can be deals being stopped or conditions on sale being imposed by ministers.
(Adapted from TheGuardian.com)