New Foreign Investment Regime in UK
The U.K. government recently published a White Paper regarding the regulation of foreign investment and national security.
Also known as a ‘U.K. CFIUS Regime’, the White Paper follows from an initial Green Paper released in October 2017, in which focuses predominately upon U.K. Merger Control Rules in relation to the U.K. Economy. One of the key elements within the paper is the potentially new ‘screening regime’ that the U.K. will have when reviewing foreign investments that could pose a threat to the U.K.’s National security.
At present, the U.K. currently uses the ‘Enterprise Act 2002’ alongside the ‘Competition regime’ to review merges on national security. However, the White Paper comes following from complaints from the U.K. government not having enough powers to act upon foreign investments which may become an issue of national security. Therefore, the U.K. government shall now receive a vast extension of these powers, should the White Paper follow through.
By adapting a specific regime in aid of national security such as the ‘based merger control regime’, the U.K. shall be following in the footsteps of other countries who also have this regime in place. This because by having a merger control regime, this shall be seperate from the initial competition-based regime, in which most countries follow.
Furthermore, one of the proposed changes is that there shall be ‘voluntary notification’, whereas businesses may raise specific transactions by foreign investors that may be a potential threat. This shall then be taken up by the UK government for assessment, in which the transaction cannot be completed until approval.
If implement fully, the UK aims to target foreign investment in relation to significant influence or acquisition of assets, which may lead to abuse of influence or control, becoming a national security issue to the UK.
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