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Suzanne Townley

News Editor, Solicitors Journal

Law Society warns new security and investment bill is 'a sledgehammer to crack a nut'

Law Society warns new security and investment bill is 'a sledgehammer to crack a nut'


The Law Society fears that legitimate foreign business will be adversely affected

The Law Society of England and Wales has warned that a ‘well-intentioned’ bill aimed at controlling foreign investments that may pose a security risk, could negatively impact legitimate foreign business at a time when businesses are already struggling.

Law Society president, I. Stephanie Boyce, said: “Overall, the Law Society supports the National Security and Investment Bill, its clear intention to control foreign investments that may have national security implications, and the need for safeguards.

“However, as drafted, the bill casts its net too wide across ill-defined territory and could easily make international business both more difficult and more uncertain in Britain.

She added, “We need legislation that is proportionate and stands the test of time. The National Security and Investment Bill is a sledgehammer to crack a nut and will hinder global Britain’s growth.”

Boyce said it is “critical” for investor confidence that “that the bill defines national security and distinguishes it from national interest.”

She recommended that it “make explicit those factors that should not be taken into account in assessing whether a trigger event would give rise to a national security risk – such as domestic political interests.”

Her view is that the scope of the bill is so wide, the number of deals being scrutinised annually could “rise to thousands” compared to current numbers of just 20–30.

Boyce commented, “The bill commits government to a decision for businesses within 30 days, but with so many deals to audit in such a short timeframe, complex deals could easily get held up and so be jeopardised.

“This increase in the scope of the national security regime moreover means that even small businesses receiving minor international investment could find themselves caught in the bureaucratic web of the regime.”

She added, “Investors will also take no comfort from the fact that the bill would allow the government to void a transaction up to five years after the event. This is completely out of step with the pace at which international business and investment moves. We believe a two-year limit is essential to give foreign businesses confidence that the UK is a safe place to invest.”