UK Law and Practice Contributed by: Federico Fruhbeck, Alice Brogi, Alex Bluett and Gisele Zouein, Gibson, Dunn & Crutcher LLP
5.4 National Security Review/Export Control National Security Review The NSIA governs the national security review of UK investments, covering any acquirer, domestic or for- eign. Some investments require mandatory pre-clos- ing notification and clearance, while the government can broadly investigate investments on national secu- rity grounds. Factors for review include: • the target’s activities, including those adjacent to the 17 sensitive sectors under the NSIA; • specific investment aspects, such as the access or information rights acquired; and • the acquirer’s nature, including jurisdiction, foreign government ties and potential hostility towards UK interests. Export Control Most aspects of the UK’s export controls regime derive from multilateral agreements (eg, the Was- senaar Arrangement). Controlled items evolve with technological advancements and include military and dual-use items, non-military firearms, items that can be used for capital punishment and items with a radio- active source. Licensing is required for exporting controlled items, overseen by the Export Control Joint Unit, with enforcement managed by HMRC, Border Force and the Crown Prosecution Service. Violations are crimi- nal offences but may be resolved through civil settle- ments. Export restrictions also cover brokering and technical assistance and may intersect with sanctions regimes, necessitating dual compliance for some licences. Trade sanctions are implemented and enforced by the Office of Trade Sanctions Implementation. 5.5 Antitrust Regulations UK merger control operates under a voluntary filing system, meaning that parties are not required to notify the CMA or obtain clearance pre-closing. However, the CMA can investigate transactions (including post- closing), issue “hold separate orders” and, if compe- tition issues arise, require transaction unwinding. To mitigate risk, parties may choose to engage with the CMA voluntarily.
• are admitted to trading on a UK-regulated mar- ket, a UK multilateral trading facility or any stock exchange in the Channel Islands or the Isle of Man (a “relevant market”); or • have been admitted to trading on a relevant market in the previous two years. Until changes made in February 2025, the Takeover Code used to apply to a broader range of entities including unlisted public companies, and in limited cir- cumstances private companies (eg, where shares have been publicly traded on certain markets or matched bargain facilities during the prior ten years), that have their registered offices in the UK, the Channel Islands or the Isle of Man and which are considered by the Takeover Panel to have their place of central manage- ment and control in the UK, the Channel Islands or the Isle of Man. Transitional provisions apply under which a company which was subject to the Takeover Code in February 2025 but does not come within the reduced scope of the Code (a “transition company”) will remain subject to the Takeover Code until February 2027. 5.3 Restrictions on Foreign Investments Foreign direct investment in the UK is principally governed by the National Security and Investment Act 2021 (NSIA), which allows the UK government to review investments in sectors related to national security. The regime includes a pre-closing, manda- tory clearance process for investments reaching more than 25%, more than 50%, or 75%+ of voting rights in companies engaged in 17 specified sensitive sectors, such as robotics, artificial intelligence, space technol- ogies, synthetic biology, export-controlled materials, energy, communications and defence. Failure to sub- mit a mandatory notification when required can result in the transaction being void, with potential financial and other (including criminal) penalties. Voluntary notifications are also possible, enabling government review based on the target’s activities and investment type, and the acquirer’s profile. If deemed a security risk, the government may block, unwind or amend transactions. The NSIA’s broad scope includes minority stakes that grant “material influence”, for- eign-based targets with UK connections and internal reorganisations, with some exclusions under consid- eration.
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