A new bill is to be introduced by the government to prevent hostile foreign takeovers.
Called the National Security and Investment Bill, it gives powers for Government to prevent any deal it decides causes an unacceptable risk to national security.
This bill comes off the back of recent fears surrounding Chinese tech giant Huawei and the potential security risks the company poses to British communications security.
The proposal would protect the 17 key sectors and will force foreign companies to explain their plans to the government for approval.
The government has only intervened in in foreign takeovers 12 times since 2002 and this will be the first change in 20 years.
The UK has historically been more laissez-faire when it came to foreign investment compared to the US or Germany and these updated rules will bring the UK more in line with them.
Nicole Kar, UK head of competition law at Linklaters and specialist adviser to the Commons Foreign Affairs Committee, said the rules were “a real step-change in terms of government powers. There’s been a lot of concern around foreign investors buying up start-ups. I think there’s a real feeling in the government that more needed to be done.”
Business Secretary Alok Sharma said: “The UK remains one of the most attractive investment destinations in the world and we want to keep it that way. But hostile actors should be in no doubt – there is no back door into the UK.”
The penalty for non compliance will be:
• Sanctions – 5% of worldwide turnover or £10m, whichever is greater.
This has been a stark change from last year when Boris Johnson defended the takeover of UK defence and aerospace company Cobham by a US private equity firm.
At the time it was “very important we should have an open and dynamic market economy”.