UK companies protected from foreign takeovers
The UK Government is stepping in to protect many businesses vulnerable to foreign takeover. The extreme conditions created by Covid-19 have exposed even the most innovative of companies, forcing moves to be made to protect national interests.
Changes to the Enterprise Act 2002 (AE02)
From today, Tuesday 23 June 2020, the updated EA02 will extend powers to scrutinise foreign acquisitions of companies directly involved in pandemic response and national security, protecting critical businesses in medical and security fields. The new powers enable BEIS to scrutinise foreign mergers and takeovers at a lower threshold on turnover.
The law already allows interventions if the transaction raises concerns in the UK about media plurality, financial stability and national security. It will now cover companies at the forefront of the pandemic response, including vaccine research, AI, cryptographic technology, and even PPE manufacturers.
Safeguarding UK businesses
The continued globalisation of capital markets has seen increased foreign ownership of assets in most developed economies. Now, the UK is joining the ranks of such countries as France, Germany, the Netherlands and Spain, whose governments have stricter control over takeovers to protect national businesses.
It’s worth reminding that the Government has intervened on public interest grounds under the EA02 on 20 occasions: 12 on national security grounds, 7 on media plurality and once on financial stability.
The question is, will this strategy work?
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