Global Britain in a Competitive Age – or the Integrated Review as it is referred to – sets out the government’s overarching national security and international policy objectives to 2025, including the ambition to boost Britain's trade, security and diplomacy in the Indo-Pacific region.
It includes the ambition for the UK to incorporate science and technology as an integral element of national security and international policy, which the government says will be essential in gaining economic, political and security advantages. The review also highlights the importance of strengthening security and defence at home and overseas to protect against a range of growing physical and online threats.
Back in November, the government’s National Security and Investment Bill set out wide-ranging new powers allowing the government to scrutinize investments and intervene in takeovers and investments by foreign companies where it believes there could be a risk to national security.
The new powers stipulate that prospective overseas buyers of UK companies, shareholdings or intellectual property across 17 sensitive industries – including civil nuclear, communications, data infrastructure, artificial intelligence and computing hardware - will have to alert a new government unit – the Investment Security Unit - about their proposed transactions.
David Petrie, ICAEW’s Head of Corporate Finance, said: “Being able to protect our intellectual property and our science and technology base is at the heart of the government’s strategy. The National Security and Investment Bill supports the aspiration of ensuring our most valuable technologies are not sold to hostile actors.”
The National Security and Investment Bill is entering its final stages in the House of Lords, before being formally submitted for Royal Assent in the coming months. It will mark a significant step-change in the UK’s approach to inward investment, takeovers, M&A, private equity-backed buyouts and venture capital and is likely to impact a very large number of corporate transactions.
New rules about mandatory notification mark an end to the UK’s relatively light-touch approach to M&A deals. They would apply to 17 industries that the government deems to be sensitive, with the scope of the Bill making the UK potentially more protectionist than other jurisdictions that already have similar legislation in place, including the US, Canada, Japan, France, Germany and Australia. The government’s own estimates suggest the newly created Investment Security Unit (ISU) might in future see between 1,000 and 1,830 notifications per year by companies and their advisers who are involved in deals.
ICAEW’s Corporate Finance Faculty team have been engaged with government ministers, senior civil servants and ICAEW members about the Bill since the Green Paper in 2017. In November, David Petrie gave evidence to the Public Bill Committee of the House of Commons, calling for the government to make it as easy as possible for companies to notify acquisitions.
“We are pleased to see that a number of our recommendations have been taken into account, in particular tightening up some of the definitions of business included in the scope of the legislation, notably in the areas of communications and artificial intelligence,” Petrie said.
· The Corporate Finance Faculty has established a National Security and Investment Hub to help members understand and prepare for the implementation of this new regime.
ICAEW Know-How from the Corporate Finance Faculty
This guidance is created by the Corporate Finance Faculty – recognised internationally as a centre of professional excellence in corporate finance. The Faculty is the largest network of professionals involved in corporate finance and represents the interests of its members with policymakers and facilitates a highly effective business development network.
