Anyone contemplating buying or selling a company or business, or a significant stake in a company or business, needs to be aware of and consider the provisions of The National Security and Investment Act (the Act) which comes into force on 4 January 2022.
The Act is being brought in by the Government to protect national security, but has a wider potential relevance than this might suggest in that it applies to businesses in any of the following 17 areas of the economy:
- Advanced Materials
- Advanced Robotics
- Artificial Intelligence
- Civil Nuclear
- Communications
- Computing Hardware
- Critical Suppliers to Government
- Cryptographic Authentication
- Data Infrastructure
- Defence
- Energy
- Military and Dual-Use
- Quantum Technologies
- Satellite and Space Technologies
- Suppliers to the Emergency Services
- Synthetic Biology
- Transport
In summary only, proposed acquisitions of a significant interest in a UK based company or business in any of these fields may need to be notified to the Government for consideration of the effect of the transaction and approval.
Failure to notify and obtain approval for a proposed transaction covered by the legislation results in the transaction being void and could give rise to criminal and civil penalties of 5% of the business’s turnover or £10 million, whichever is greater. Even if a transaction is of low value or unlikely to have any impact on national security, it should be notified if covered by the Act.
The government has recently set out detailed guidance of what activities fall within the scope of the legislation.
If you are contemplating a transaction which may be covered by the legislation and would like advice, please contact Roy Colaba r.colaba@sydneymitchell.co.uk in our corporate team for more information on 08081668827.
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