and that the provisions of the order are necessary and proportionate for the purpose of preventing , remedying or mitigating the risk .
A final order may impose conditions on the transaction or the parties , including to require the parties to do or not do particular things , and the Secretary of State may also block or unwind the transaction . To date , the Secretary of State has issued one final order to block a transaction . This was in respect of an intellectual property licencing agreement between the University of Manchester and Beijing Infinite Vision Technology Company Limited , due to the potential dual-use of the intellectual property such that it may be used to build defence or technological capabilities that may present a national security risk to the United Kingdom . Interestingly , the parties voluntarily notified the transaction because , as an asset transfer , it was outside the scope of the mandatory notification regime .
The Secretary of State ’ s call-in powers also have retrospective effect and can be exercised in respect of any relevant transactions that completed between 12 November 2020 and 3 January 2022 . To date , only three call-ins have been made public : the first relating to Nexperia ’ s proposed acquisition of Newport Water Fab , the second relating to Altice acquiring 6 % of the shares in BT and the third relating to Macquarie and British Columbia Investment Management Corporation ’ s proposed acquisition of 60 % of the National Grid ’ s transmission business .
Nexperia is a Dutch entity owned by Chinese company Wingtech and the target , Newport Water Fab , is the UK ’ s largest manufacturer of microchips , reportedly with several contracts with the UK Government , including in relation to defence . The call-in of this transaction is an example of target and purchaser risk , with Chinese control of a manufacturer of critical technologies with contracts with Government potentially posing national security concerns .
Timeframe for reviewing transactions
Transactions that are notified ( either voluntarily or due to mandatory notification obligations ) are subject to an initial screening , during which the Investment Security Unit ( the “ ISU ”), on behalf of the Secretary of State , will consider whether the risk factors set out above will apply . The Secretary of State must then exercise the call-in powers within 30 working days of notification .
Following the issuance of a call-in notice , there is a period of 30 working days ( extendable by a further 45 working days if the Secretary of State determines that there is a national security risk and further time is necessary to assess the transaction ) in order to complete the national security assessment and either approve the transaction or impose an order .
Sanctions and consequences of failing to comply with the Act
A notifiable transaction that completes without the approval of the Secretary of State is void , meaning that failure to comply with the Act could create serious commercial consequences . The Act also contains a suite of offences , including :
• for completing a notifiable transaction without approval from the Secretary of State ;
• for failure to comply with an interim or final order made under the Act ;
• in relation to the supply of information to the Secretary of State and the attendance of witnesses ; and
• unauthorised disclosure of information provided by the Secretary of State under the Act .
The Act provides that where a corporate entity commits an offence under the Act with the consent an officer ( including a director , member of its management committee , chief executive , manager , company secretary or similar person ), or due to the neglect of an officer , the officer is also guilty of the relevant offence and is personally liable .
The sanctions for the two key offences – completion of a notifiable transaction without approval and breach of an interim or final order – are subject to a maximum financial penalty of the higher of £ 10 million or 5 % of total worldwide turnover where a corporate entity has committed the offence and £ 10 million where the offence is committed by an individual . The sanctions where an individual commits the two key offences are :
• on summary conviction in England and Wales , to imprisonment for a term not exceeding 12 months , or a fine , or both ; and
• on conviction on indictment in England and Wales , to imprisonment for a term not exceeding 5 years , or a fine , or both .
3 . Application to the energy sector
The Regulations set out four categories in relation the energy sector :
• upstream oil and gas , in relation to qualifying entities involved with upstream petroleum facilities , such as terminals , pipelines and related infrastructure and those with a petroleum licence under section 3 of the Petroleum Act 1998 ;
• downstream oil , in relation to qualifying entities involved in the import , storage and transportation of crude oil in the UK , as well as the import , refining , storage and distribution of refined products in the UK ;
• downstream gas , in relation to qualifying entities involved in onshore processing , transportation and distribution of natural gas , including owners and bracewell . com