Kwarteng makes concession on new UK takeover regime
Business minister raises threshold at which foreign buyers must notify authorities
Business secretary Kwasi Kwarteng has further revised tough new UK legislation on foreign takeovers to try to make the system more “proportionate” and ensure the new rules do not deter overseas investors.
Kwarteng, appointed to his post in January, has sought to refine the scope of the government’s National Security and Investment Bill, which aims to impose stringent safeguards on foreign ownership of British companies.
A government amendment to the bill, introduced on Friday, has changed the proposed overseas stake threshold at which Kwarteng’s department must be notified about a bid from 15 per cent to 25 per cent.
It follows a move last month when Kwarteng narrowed the list of which type of foreign investments will fall foul of the new takeover regime, after business lobby groups expressed fears about the scope of the legislation.
The bill, currently being scrutinised by the House of Lords, is part of a drive by Boris Johnson’s government to stop China or other countries deemed to be hostile from acquiring stakes in sensitive UK companies, particularly technology businesses.
Kwarteng has re-examined the bill following complaints from business groups that its scope could create delays and massive bureaucracy around uncontroversial deals involving overseas bidders.
The new 25 per cent notification threshold for a foreign company hoping to take a stake in a UK company mirrors similar restrictions in the US.
“This change will ensure the new regime is proportionate and as transparent as possible without reducing the government’s intervention powers,” said a government spokesman.
“The National Security and Investment Bill will strengthen the UK’s ability to investigate and intervene in mergers, acquisitions and other types of deals that could threaten our national security. The overwhelming majority of transactions will be unaffected by these new powers.”
Under the government amendment, the secretary of state will retain the power to scrutinise acquisitions where a foreign bidder is proposing to buy less than a 25 per cent stake in a UK company if the minister reasonably suspects that this amounts to the purchase of “material influence”. That power would be available up to five years after an acquisition takes place.
The government is retaining the right to reintroduce a 15 per cent notification threshold if deemed appropriate in the future, although the business department said it did not expect this to be necessary.
Last month the government tightened some of the definitions of the 17 industries covered by the bill in order to “streamline” the system.
Officials said that should mean a drop in the number of transactions that are notified under the planned takeover regime from a previous estimate of up to 1,800 each year. Only a small percentage of these are likely to be blocked by the government or face “remedies”.