The government is seeking new powers to scrutinise the purchase of assets such as intellectual property via foreign takeovers if they raise national security concerns
The government is publishing a national security and investment white paper setting out how it will upgrade its powers to scrutinise investments and address the risks that can arise from hostile parties acquiring ownership of, or control over, businesses or other entities and assets that have national security implications.
Business Secretary Greg Clark said: ‘These proposals will ensure we have the appropriate safeguards to protect our national security whilst ensuring our economy remains unashamedly pro-business and open to high levels of foreign investment in the future.
‘The proposals are consistent with many of our major partners and allies around the world, including countries such as Australia, Japan, Germany, and the US, who have and are similarly looking to upgrade their powers.’
Under the white paper proposals, the government will encourage businesses and investors to notify it ahead of transactions that might give rise to national security risks.
The government will also have powers to ‘call in’ transactions that may give rise to national security risks to assess them more fully. Measures are designed to ensure that hostile parties or groups cannot circumvent the rules by acquiring an asset that has national security implications, such as intellectual property, rather than acquiring the business itself.
The remedies proposed by the government include confirmation to proceed and approval subject to conditions. In addition, in what it says are the rare circumstances where it is the only available course of action, the government will have the ability to block or unwind a deal which has already taken place.
For the first time, breaches of the government’s recommendations over such deals will be classified as a criminal rather than a civil offence.
Proposed sanctions for a criminal offence include unlimited fines and/or imprisonment up to five years. Civil penalties are to be set at 10% of a company’s worldwide turnover, and for an individua 10% of total income or £500,000 (whichever is higher).
The consultation is open for comment until 16 October.
National security and investment: proposed legislative reforms is here.
Report by Pat Sweet
