The United Kingdom’s law on screening foreign direct investment casts a wide net over assets with a link to the U.K., often to the surprise of potential acquirers, McGuireWoods London partner Matthew Hall wrote in a Feb. 15, 2024, commentary in Law360.
The National Security and Investment Act 2021 (NSI Act) gave the U.K. government wider scope to intervene in transactions seen as potentially affecting U.K. national security. Hall wrote that U.K.-based Vodafone’s recent strategic relationship agreement with Etisalat, which is majority-owned by the United Arab Emirates, provides a good example of the NSI Act’s reach.
The tie-up between the two telecoms gives Etisalat a small stake in Vodafone and the right to appoint at least one member to Vodafone’s board. The U.K. government ruled that this was enough to create a national security risk and give it power to impose conditions on the deal since Vodafone is a strategic supplier to the government.
“Foreign direct investment regimes around the world are notoriously expansive in scope and difficult to navigate. The U.K.’s NSI Act is no exception to this,” Hall wrote.
Hall, a member of McGuireWoods’ Government Investigations and White Collar Litigation Department, has written frequently about the NSI Act and its implications for investors.