Last week on 24 February, Baker McKenzie was delighted to sponsor the annual M&A Practitioners’ Summit, hosted by City & Financial Global. Featuring a wide range of speakers from regulators, public bodies, industry and private practice, the virtual summit addressed recent key regulatory, legal and market developments impacting transactional practice.
Inevitably, the National Security and Investment Bill (“Bill“) featured highly on the topics of discussion. As covered in previous blog posts (here), the Bill will establish a far-reaching new investment screening regime in the UK, and will significantly expand the UK Government’s existing powers to review investments on national security grounds. The summit featured a keynote address regarding the Bill from Sarah Mackintosh (Deputy Director, National Security and Investment Bill, Department of Business, Energy and Industrial Strategy (BEIS)), and a panel event discussing the impact of the Bill on UK business and markets featuring the co-heads of Baker McKenzie’s UK Foreign Investment Review practice Sunny Mann and Samantha Mobley.
Sarah Mackintosh’s address offered some cautiously promising signs that issues identified with the draft regime may be mitigated. She indicated that the recently closed consultation on mandatory notification sectors under the Bill would lead to narrowed definitions (the UK Government has now published its consultation response honing the draft sectors), and that there will be another targeted consultation aimed at refining the definitions further. The Bill is expected to receive Royal Assent in May, with the regime likely to come into force in the autumn on the passing of relevant secondary legislation. It was also reaffirmed that BEIS is seeking to provide to transacting parties as much informal guidance as possible in the interim period of the Bill – this is crucial given that the UK Government will have retrospective powers to call in transactions taking place from 12 Nov 2020.
Nevertheless, significant concerns remain as to the scope and potential impact of the new regime, as underlined in the panel event chaired by Baker McKenzie. These include:
- A likely conflation of national security and industrial policy concerns;
- Lack of a definition of national security in the Bill;
- Extra-territorial applicability;
- The fact that investments by UK companies are equally caught;
- Absence of de minimis safe harbours;
- Inadequate transparency and guidance; and
- Impact on intra-group transactions.
Baker McKenzie has been centrally involved in the UK Government consultation process around the Bill, and will continue to strongly make the case for a regime that is targeted, proportionate and consistent, enabling the UK Government to act on genuine national security risks while minimising cost and resource burdens for the vast majority of legitimate and beneficial UK inbound investments.
The panel comprised:
- Sunny Mann, Partner, Baker McKenzie (Chair);
- Samantha Mobley, Partner, Baker McKenzie;
- Daniel Summerfield, Head of Corporate Affairs, Universities Superannuation Scheme;
- Dr Roger Barker, Director of Policy, Institute of Directors;
- David Petrie, Head of Corporate Finance, ICAEW.
If you have any questions or would like to find out more about the support Baker McKenzie can provide in relation to the Bill, please don’t hesitate to contact Sunny Mann or Samantha Mobley via the details below.
