British law to protect key assets from foreign buyers

LONDON • Britain plans sweeping powers to intervene in foreign takeovers of British assets deemed a threat to national security.

A draft law which was to be published yesterday would expand the range of transactions open to government intervention, said the Department for Business, Energy and Industrial Strategy.

There would be scope for fines and retroactive interventions in deals that are completed after the Bill's publication - a potentially controversial provision that critics warn could deter investors.

The legislation does not explicitly identify any particular country, but comes against a backdrop of heightened political concerns in Britain over China's involvement in critically important infrastructure projects.

The proposed legislation covers sectors such as defence, energy and transport, as the government seeks to stop British companies, infrastructure and intellectual property falling into "hostile" ownership.

At the same time, the department said the new scrutiny process will be "slicker" than at present, by imposing set timeframes within which ministers must come to a decision.

"The UK remains one of the most attractive investment destinations in the world and we want to keep it that way," Business Secretary Alok Sharma said in a statement. "But hostile actors should be in no doubt - there is no back door into the UK."

Members of Prime Minister Boris Johnson's Conservative Party have been campaigning for government action against foreign involvement in security-sensitive projects, with a particular focus on the influence of China.

Earlier this year, they pressed the Premier to ban Huawei Technologies from Britain's next-generation wireless networks, reversing an earlier decision to allow the company a role.

China's involvement in Britain's nuclear power programme has also given rise to concerns.

In 2016, then Prime Minister Theresa May paused the Hinkley Point C nuclear project, which is backed by Chinese investment, before eventually allowing it to proceed.

Under the National Security and Investment Bill, foreign buyers from all countries purchasing British assets in 17 sectors would be obliged to notify the government of the transaction.

Only some deals in those sectors will be covered, and a separate consultation will determine the full scope of the law. Ministers would then have 30 days to either allow a transaction to proceed or call it in for further scrutiny on national security grounds.

If that path were chosen, the business secretary would have a further 30 days to make a decision, extendable by another 45 days in the most complex cases.

BLOOMBERG