Energy acquisitions by foreign companies will be screened for potential national security implications, under new legislation.
The National Security and Investment Bill gives powers for the government to scrutinise, impose conditions on or block deals in any sector where there is an “unacceptable risk” to national security.
Energy and civil nuclear power are on the list of sectors where the government expects some transactions will face “mandatory” notifications.
A factsheet published by the Department for Business, Energy & Industrial Strategy (BEIS) says it will be carrying out further consultation on which parts of these sectors should be covered by the new regime.
Under the bill, investors and businesses will have to notify a dedicated government unit through a digital portal about “certain” types of transactions in designated sensitive sectors, such as defence and energy.
The Investment Security Unit will then investigate and take action to address any national security risks raised by the deal.
The new unit will sit within BEIS and provide a single point of contact for businesses wishing to understand the bill and notify the government about transactions.
It will also coordinate cross-government activity to identify, assess and respond to national security risks arising through market activity.
Mandatory notification will apply to some national infrastructure sectors defined by the Centre for the Protection of National Infrastructure.
Within these core areas, the BEIS secretary of state will identify in regulation the specific activities where risks are most likely to arise and call-in powers most likely to be used.
Acquisitions of entities involved in these activities will be subject to mandatory notification. Assets will not be subject to mandatory notifications but their acquisition is more likely to be called in if they are closely related to sensitive activities.
The new framework updates the UK’s current powers for policing foreign acquisitions, which were shaped almost 20 years ago, and brings them in line with those of close allies, including Australia and the USA.
Announcing the new legislation, the government said it is taking a “targeted, proportionate approach” that will apply to investors from any country and will ensure that no deal potentially threatening the safety of the British people “goes unchecked”.
It also says the new regulations are designed to protect vulnerable businesses from overseas investors
The government says most transactions will be cleared without any intervention and that the UK will remain an attractive place to invest.
Business secretary Alok Sharma said: “Hostile actors should be in no doubt – there is no back door into the UK.”
The new legislation follows the publication two years ago of a National Security Investment White Paper, which was prompted by concerns that foreign intelligence agencies were undermining UK security by targeting the country’s infrastructure, defence and other key sectors.
Recent months have seen mounting concerns, including on the Conservative backbenches, about Chinese involvement in the UK’s nuclear power programme. As well as being EDF’s partner at Hinkley Point C, state-backed nuclear developer CGNU wants to build its own plant at Bradwell in Essex.