The change will be presented to parliament today and proposes an amendment to the Enterprise Act which was brought in in 2002. Examples of companies that may be protected by the new legislation are those that manufacture personal protective equipment (PPE).
A release from the UK government said: “The economic disruption caused by the pandemic may mean that some businesses with critical capabilities are more susceptible to takeovers – either from outwardly hostile approaches, or financially distressed companies being sold to malicious parties.”
These changes will expand powers to scrutinise and intervene in mergers in three sectors of the economy central to national security.
It will lower the thresholds that must be met in the areas of artificial intelligence, cryptographic authentication technology and advanced materials.
Secretary of state for Business, Alok Sharma said: “To better protect the country’s resilience to COVID-19 we are taking steps now to mitigate against public health emergencies.
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The UK is replicating some rules already brought in in EU countries.
“These measures will strike the right balance between the UK’s national security and resilience while maintaining our world-leading position as an attractive place to invest – the UK is open for investment, but not for exploitation.”
“These powers will send an important signal to those seeking to take advantage of those struggling as a result of the pandemic that the UK government is prepared to act where necessary to protect our national security.”
At the moment, the government can only intervene if a business that is subject to a takeover has UK turnover of more than £1million.
France, Germany, Italy and Spain already adhere to these rules. The legislation will bring the UK in step with these.
This comes amid concerns about China buying up high-tech companies.
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Companies will be protected from hostile takeovers.
Imagination Technologies, a Hertfordshire-based semi-conductor company by Canyon Bridge Partners, was bought by a Chinese company in 2017.
99 percent of the funds in that deal came from a company backed by the Chinese government.
“This is just part of an incremental process where technology is being moved out of the UK, and out of the West, and towards China,” Tom Tugendhat MP, who chairs the Foreign Affairs Select Committee, told the BBC.
These plans were first introduced by former prime minister Theresa May.
Boris Johnson has also previously outlined plans to introduce law to deal with “the buying up of UK technology now by countries that . . . may have ulterior motives.”
The EU has also previously raised concerns about foreign powers buying up European companies that are under stress.