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HMG uses national security powers to order the disposal of a UK company acquired by Chinese investor
14 November 2024
The U.K. government has used its powers under the National Security and Investment Act 2021 (the UK’s version of CFIUS) (“Act”) to order a Chinese-registered firm to sell its stake in a British semiconductor company.
The Final Order, a summary of which was published on 6 November 2024, requires FTDI Holding Limited to sell its 80.2% shareholding in Future Technology Devices International Limited (“FTDI”) because of (i) a risk that the acquired technology and IP could be used in ways that are contrary to UK national security; and (ii) a risk to critical national infrastructure which uses FTDI products.
Given the acquisition completed in December 2021 – almost three years ago – it looks as if the review took place under the “look-back” provisions of the Act. These provisions allow the UK government to conduct national security reviews of acquisitions (assuming the ownership/control thresholds are met) completed between 12 November 2020 and the commencement of the Act (i.e. 4 January 2022).
For acquisitions completed within this “look-back” period – assuming the UK government wasn’t aware of the acquisition prior to 4 January 2022 – a call-in notice for a national security review must be given within 6 months of the UK government becoming aware of the acquisition, and can be given no later than 4 January 2027.
This Final Order once again indicates the sensitivity of UK companies which develop or exploit semiconductor technology by Chinese acquirers. More broadly, it illustrates the very broad powers the UK government has under the Act to conduct national security reviews of UK acquisitions.
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Hogan Lovells helps clients navigate the increasing complexity of FDI filings globally. We analyse where a M&A transaction might require FDI filings and where notifications may otherwise be warranted. We structure deals so that they allow for the quickest path to closing from an FDI perspective, and we prepare and coordinate such filings with our own offices across the world and with a tried and tested network of local partner firms. Reach out to us for any FDI guidance.
Authored by Aline Doussin and Daniel Shapland.
The U.K. government has used its powers under the National Security and Investment Act 2021 (the UK’s version of CFIUS) to order a Chinese-registered firm to sell its stake in a British semiconductor company.
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