On 11 November 2020, the UK government published draft legislation, the National Security and Investment Bill (the “Bill”), which will significantly change the treatment of mergers and acquisitions in the United Kingdom and will introduce a new security screening regime separate from competition law. 

Once in force, it will require prior notification and approval of the acquisition of certain shareholdings or voting rights in “qualifying entities” active in a wide range of sensitive sectors, including acquisitions of minority interests as low as 15%. The Bill also provides for a “call-in” power (i.e. the power to review transactions retrospectively) and a voluntary notification procedure in respect of other acquisitions, including in relation to a wide range of assets, such as intellectual property, as well as acquisitions of material influence, in any sectors in which national security issue might arise.

In view of the scope and broad-ranging nature of the proposed new powers, they will be of interest to energy companies. Transactions taking place from today until the commencement of the new regime will become subject to the call-in power once the new legislation enters into force, creating risks for companies with immediate effect.

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