The government of the UK introduced legislation to protect the businesses that are the key to public health from foreign takeovers.
The alterations give the government of the nation the power to protect companies that would play a crucial role in helping the country in the future regarding health emergencies. The government aims to target those companies that are struggling to survive the coronavirus pandemic.
The newfound powers of the government allow it to cover firms, such as the pharmaceutical and technology-based businesses.
According to Alok Sharma, the secretary of state for business, energy, and industrial strategy, these powers will send a signal to those who seek to take advantage of the situation. It will prevent people that are trying to overpower the companies that are struggling as a result of the pandemic. The government is ready to act where necessary to protect the national integrity and security.
He even said that he’s changing the law to protect those important businesses from succumbing to opportunistic investors.
Currently, the government possesses the power to investigate takeovers for reasons, such as national security and on financial grounds, including the ability to prevent a takeover or seek assurances from the buyer regarding plans for a business.
The changes brought to the Enterprise Act 2002 mean that the government could take action to save businesses that can help the nation. It will stand by the companies that can respond to a pandemic. The government is willing to help the manufacturers of protective equipment and virus testing specialists that are on the radar of foreign firms.
The legislation even expands the government’s ability to investigate takeovers involving companies in the technology sector, such as Artificial Intelligence or encryption.
Sharma mentioned that some potential takeovers or mergers in these areas presently fall outside of the government’s powers for intervention. It’s because the companies are often new and relatively smaller than the others.
He introduced a new law to reduce the threshold for intervention on turnover and share of supply for these areas to give the government the oversight that it requires. It’s a bill that will ensure that parties can’t avoid the scrutiny of the law by acquiring an asset that could have national security implications.
Presently, the government can intervene only if a business that is the subject of a takeover has an annual turnover of 1 million pounds in the UK.
Last month, the prime minister mentioned the importance and necessity of protecting the country’s technological base.
He mentioned that the concern regarding the investment shown by the MPs is genuine. He says that he smells ulterior motives when foreign firms attempt to buy technological advancements brought forth by the UK’s scientists and researchers.
The government didn’t need to intervene as of yet. It didn’t pinpoint any deal based on national security grounds. Nevertheless, it did impose specific conditions on the buyers.
The legislation brought the UK in step with countries, including France, Germany, Italy, and Spain. The governments of these nations have more stringent control measures in place to prevent potential takeovers.
