The National Security and Investment Act 2021 came into force today; and it is something anyone reading this in the UK will probably want to keep in mind.
At a very broad level, it requires that the Government be informed of any change in control (using the thresholds from the Companies Act 2006 for ‘persons of significant control’ i.e. starting at 25%) or change in material influence (using the merger guidance derived from the Enterprise Act 2002) of a qualifying entity. You’ll then have to wait for the Government’s blessing for thirty days (unless they extend it) before completing the transaction, otherwise it’ll risk being voided.
Qualifying entities are defined in the associated regulations. The good news is the traditional Public Electronic Communications Networks/Services have a turnover threshold (£50m) before they are in scope – but this may fall away if they provide certain government services, supply the emergency services or operate certain infrastructure.
It has some extra-territorial effect and covers non-UK property if it relates to provision of services in the UK and has some retrospective effect in relation to transactions after November 2020. Importantly, there does not appear to be any substantial thresholds to exempt small or micro enterprises from the regime, meaning any entity or person operating in UK telecommunications comes into scope.
It’s a complex area and a simple ‘ready reckoner’ is not that helpful – each transaction will need to be reviewed on its individual merits. On the plus side, such transactions are usually overseen by legal professionals, so our clients should be aware of this where it applies.