UK Investment Rules
What are the legal considerations of investing in the uK?
UK Investment Rules
The United Kingdom has a history of welcoming foreign investment.
As the country moves into a post-EU era, new measures are expected to result from the UK’s trade negotiations with nations across the globe to ensure the continued appeal of the British economy among foreign investors.
There are no laws specifically governing or limiting inward foreign direct investment (FDI) to the UK. Investors of both UK and non-UK nationality are treated the same under law and are able, in most cases, to participate equally in the UK economy.
The exceptions are government-owned or controlled areas such as some parts of the energy and transport sectors, and the in the defence sector, restrictions apply to both UK and foreign investors.
Despite the lack of a specific legal framework, investors should be aware that the UK Government does have powers to intervene in transactions.
The following regulations apply to both British and foreign investors active in the UK.
Merger control rules
Where inward investment in the UK involves the acquisition of a business, part of the activities of a business or the creation of a joint venture that falls for review under EU or UK merger control law.
Public interest review regime
Both the UK and EU merger control regimes include provisions allowing a transaction to be reviewed on certain specified grounds other than competition law (so called ‘public interest’ or ‘legitimate interest’ grounds).
Monopoly rules regime
Where government approval is required for the proposed takeover by a foreign investor of any large or economically significant UK enterprise.
Banking and insurance enterprises
Financial Services Authority (FSA) and government authorisation must be obtained before starting operations in the UK.
Real estate acquisitions
These are generally not subject to restrictions on foreign ownership but rules may apply to how the owner of an interest in real estate uses or develops the land or building.
UK Industry Act 1975
The Government has powers to block an acquisition by a non-UK-based entity of an ‘important manufacturing undertaking’ where it appears the change of control would be contrary to the interests of the United Kingdom, or to any substantial part of it.
There are no corporate law residency requirements when investing in the United Kingdom, regardless of whether an investment in a UK company is by way of share purchase or asset purchase.
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