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UK Government Protects Firms From Foreign Takeovers

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UK Government Protects Firms From Foreign Takeovers

The British government is set to introduce a new bill that would block foreign takeovers of U.K. firms if they threaten national security.

What Happened: The National Security and Investment bill would allow the U.K. to curtail deals where it decides there are unacceptable risks to the country, with the power to stop foreign takeovers.

Companies that do not comply with the new law will face hefty sanctions, including fines and even imprisonment.

"There will also be sanctions for non-compliance with the regime, which include fines of up to 5% of worldwide turnover or £10 million – whichever is the greater – and imprisonment of up to 5 years. Transactions covered by mandatory notification which take place without clearance will be legally void,” according to the government. 

Why It Matters: The bill comes in the wake of concerns around the activities of China's Huawei Technologies Co.

In July, the U.K. banned Huawei's 5G from next-generation mobile networks by 2027 under a new plan to protect critical systems from security threats.

In 2019, British Prime Minister Boris Johnson was forced to defend the controversial takeover of the U.K. defense and aerospace company Cobham by an American private equity firm.

Johnson said at the time it was "very important we should have an open and dynamic market economy," reports the BBC.

Related links: Why The UK Is Removing Huawei 5G Technology By 2027

 

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