The UK National Security and Investment Act 2021 (the "Act") entered into force on 4 January 2022:
- The Act enables the UK Government to screen, block and
potentially unwind transactions giving rise to national security
concerns in the United Kingdom through a new authority: the
Investment Security Unit ("ISU"). These powers are
distinct from merger control.
- Acquisitions of both entities and
assets may fall within the scope of the Act.
Additionally, acquisitions of control of entities
operating within any of 17 specified sensitive sectors will be
subject to mandatory notification and will be
void unless approved. The Act may apply outside
the customary scope of M&A.
- Acquisitions may be retrospectively called-in for review for up
to five years after the acquisition trigger event (and for an
unlimited period for a non-notified transaction within the
sensitive sectors). Parties may voluntarily notify transactions
and/or consult with the ISU for greater certainty.
- The mandatory notification regime is suspensory: severe penalties are applicable for non-compliance with the notification obligation. Parties may face criminal sanctions (up to five years' imprisonment) and civil penalties (up to 5% of worldwide turnover or £10 million – whichever is greater) for completing acquisitions without approval.
Qualifying entities and assets
The scope of the Act is broad (and largely reflects earlier legislative proposals; see our previous legal update for further detailed analysis, here).
The Act applies to acquisitions of control of any qualifying entity or asset which carries on activities in the United Kingdom or supplies goods/services to persons in the United Kingdom (or which is used in connection with such activities or goods/services).
- Qualifying entities:
- Any entity (legal or non-legal person) that is not an
individual, including a company, a limited liability partnership,
any other "body corporate", a partnership, an
unincorporated association and a trust.
- An entity formed or recognised outside the United
Kingdom if it carries on activities in the United Kingdom
or supplies goods or services to persons in the United
- Any entity (legal or non-legal person) that is not an individual, including a company, a limited liability partnership, any other "body corporate", a partnership, an unincorporated association and a trust.
- Qualifying assets:
- Tangible moveable property.
- Ideas, information or techniques which have industrial,
commercial or other economic value.
- Assets situated outside the United Kingdom if they are used in connection with activities carried on in the United Kingdom or the supply of goods or services to persons in the United Kingdom.
To read the full article, please click here.
Originally published 7 January, 2022
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe - Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2021. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.