Recently, we wrote about the decision of the UK government to bring a new specified public interest consideration, in relation to public health emergencies, into existing law.
The Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2020 came into force on 23 June, with section 58 of the Act having been amended to add the public interest consideration: “The need to maintain in the UK the capability to combat, and to mitigate the effects, of public health emergencies”.
The actions that your business should take now
We have previously addressed the government’s reasoning for its changes to the Enterprise Act, as explained in guidance published by the Department for Business, Energy and Industrial Strategy (BEIS), which also described the amendment’s practical effects.
Also addressed in the BEIS guidance to accompany the Order’s entry into force is what companies may wish to do as a consequence of the new provisions.
In summary, according to the guidance, the new provisions do not impose any legal obligations that require companies to take action as a direct consequence of the Order coming into force.
However, it may be wise for businesses and investors, or their advisers, to familiarise themselves with the implications of these changes so that they will be well-placed in the event in any relevant merger or acquisition that might raise concerns in relation to the UK’s ability to combat, or to mitigate the effects of, public health emergencies.
The parties in a merger or acquisition that the new consideration may bring into the scope of government intervention may make the decision to voluntarily alert BEIS to the transaction. There will be no change to the statutory process for government public interest interventions, with the Secretary of State deciding on interventions on a case-by-case basis.
Nonetheless, to conform with the decisions the Secretary of State makes, the officials of central government departments will seek to work as early as appropriate, and as closely as appropriate, with the parties.
What factors will inform intervention decisions?
The exact information required by the Secretary of State to make their intervention decisions will vary from one case to the next. However, decisions are likely to be informed, in part, by such details as the following:
- which business, or part of a business, will change hands
- the identity of the individual or business acquiring an interest in the business or division, and any existing holdings they have in these or other industries
- the influence or control that this interest may give rise to. To ascertain this, the questions that will need to be asked may include how any new business is set to be structured, what share of voting rights will the acquirer have, and/or how many board members will they be able to appoint
- how this influence or control could be manifested
- any mitigations proposed by the parties to address the government’s concerns
- with whom government should engage
BEIS has indicated that it would welcome being notified by the parties to mergers and acquisitions that might raise concerns “as early as possible”, as this would enable it to begin its assessment process.
Where relevant, this also allows government to state that it has no present public interest concerns with a deal, meaning parties can choose to proceed subject to any relevant competition assessment and other regulatory processes. Parties should note, however, that such a decision is subject to change as relevant circumstances change or other details come to light.
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