ENGLAND & WALES Law and Practice Contributed by: James Ross, Paolo Palmigiano, Debbie Cloake, Helen Farr, Debbie Heywood and Louise Popple, Winston Taylor
Notifiable transactions are those where there is an increase in shareholding or voting rights from:
carries a heavy fine of up to 5% of the total global turnover of the acquirer, or GBP10 million (whichever is greater), and imprisonment of up to five years, and the transaction becomes void. 2.3 Commitments Required From Foreign Investors The government has accepted commitments in sev - eral cases – eg, requiring certain capabilities to remain in the UK, information barriers for sensitive informa - tion and restricted access to sensitive areas. 2.4 Right to Appeal If a company wishes to challenge certain decisions of the Secretary of State – eg, to approve, block or unwind a transaction – it can apply for a judicial review of the decision. Judicial review is the mechanism by which the courts review the lawfulness of a decision taken by a public body. An application for judicial review can be brought on the grounds of illegality, procedural unfairness or unreasonableness/irrationality, or for a breach of a right protected by the European Convention of Human Rights. Normally, an application for judicial review must be made “promptly and in any event within three months” of the decision under challenge. However, the NSIA modifies the term, and an application must be made within 28 days of any decision (extendable in excep - tional circumstances). 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity The three most common types of corporate vehicles in the UK are: • a private company (Ltd) limited by shares;
• 25% or less to more than 25%; • 50% or less to more than 50%; • less than 75% to 75% or more; or
• the acquisition of voting rights that enables or pre - vents the passing of any class of resolution gov - erning the affairs of the entity being acquired. The Act also introduces a voluntary filing if the tar - get is outside the definitions of the 17 key sectors, or is active in any sector but there are national security issues. Since filing is voluntary, there is no obligation to wait for approval before completing. However non- notified transactions that raise national security con - cerns might be called in for review by the government. Asset deals and IP licensing transactions can be sub - ject to call-in if they raise national security issues, and it is possible to notify voluntarily. The Act has extraterritorial application (therefore, for example, it will apply to acquisitions in the USA, Canada, EU, China or any other jurisdictions of non- UK entities that conduct activities in the UK or supply goods and services in the UK, even if they do not have a direct presence there). 2.2 Procedure to Obtain Approval and Sanctions for Non-Compliance Notifications are made to a dedicated government unit in the Cabinet Office, the Investment Security Unit (ISU), through a digital portal. The form to complete is not overly complex and, within a couple of weeks, the ISU will confirm whether the filing is accepted or if more information is needed. Once the Secretary of State confirms acceptance, a review period of 30 working days will start. This could end with a clear - ance or a call-in for an assessment period of a further 30 working days, at the end of which there can be clearance, clearance with conditions, prohibition or an extension of 45 working days for further review. With possible suspensions during the assessment period, full national security scrutiny can be estimated to be up to 21 weeks, or longer with the parties’ agreement. Closing a transaction that is subject to mandatory notification without notifying and obtaining clearance
• a public limited company (PLC); and • a limited liability partnership (LLP).
There are other corporate vehicles – eg, companies limited by guarantee, unlimited companies, commu - nity interest companies and charitable incorporated organisations – but these are less common.
332 CHAMBERS.COM
Powered by FlippingBook