[ESTABLISHING A BUSINESS ENTITY IN ENGLAND] 169
Whilst the UK government operates a largely “merger friendly” regime which encourages corporate activity, does not include any specific governmental oversight of transactions, and leaves the analysis of the competitive impact to the CMA, the government does reserve the power to act where a transaction engages the “public interest.” Recently, these powers have been extended to include transactions which involve national security concerns, notably those covering military/dual-use products, computing hardware, and quantum technology. In a similar vein, in 2021 the UK government enacted a new National Security and Investment Act ( NSIA ) which came into force on 4 January 2022. The NSIA makes transactions in sectors deemed to be of “national or security interest” subject to government oversight, irrespective of the size of the parties. The government has set out a list of 17 such sectors in which it will be mandatory to notify any qualifying transaction. The NSIA applies to entities and assets located in the UK, as well as those located outside the UK if they carry on activities in the UK or supply good to services to people in the UK. The government can also “call - in” transactions for investigation; much do not qualify under the NSIA thresholds, but nonetheless may give rise to national security concerns. Parties who fail to comply can be subject to large fines (and even criminal liability). Larger transactions may fall under the jurisdiction of the EU Commission under the EU Merger Control Regulation. These require compulsory notification and therefore that completion is suspended pending competition clearance. Given the implications, it is advisable always to obtain specialist competition law input at an early stage in relation to any proposed transaction.
4. Local shareholding/directors There are no requirements in England for a local shareholder or director. 5. Minority shareholders’ rights and protections Members of a company or an LLP have protection against being “unfairly prejudiced” and can bring action in the courts to seek relief for this. In the case of LLPs, this can be excluded by written agreement (typically, within the LLP members’ agreement). 6. Barriers to entry England, and indeed the UK as a whole, is relatively lightly regulated. Significant barriers to entry are only likely to apply in the case of business areas that are themselves regulated, such as banking, financial services, pharmaceuticals, and gaming. Regulation is typically intended for consumer protection. Fladgate LLP will be happy to advise further on whether a particular sector is subject to regulation. 7. Capitalisation Certain regulated sectors, particularly banking and financial services, have a requirement for capital linked to their business and its potential liabilities. 8. Immigration/visa considerations EEA and Swiss nationals residing in the UK by 11.00 p.m. on 31 December 2020 were able to continue residing in the UK from 1 July 2021 onwards, if they applied for settled (having resided in the UK for 5 years) or pre-settled status (having resided in the UK for less than 5 years), by 30 June 2021 under the EU Settlement Scheme. There is the possibility to apply out of time however an EEA/Swiss national would need exceptional reasons as to
ILN Corporate Group – Establishing a Business Entity Series
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