UK Government issues initial consultation on potential new power to block listings on national security grounds

Introduction

On 7 June 2021 the UK Government published an initial consultation seeking views on a proposed new power to allow it to block a company’s listing, if the listing presents a risk to national security.  The consultation is available here.

The consultation followed the Government identifying concerns about the possible links between listings and national security in its 2019 Economic Crime Plan and undertaking to investigate these concerns further.

In November 2020, the Government announced that its further investigations had shown that there were remote but possible scenarios in which a company listing in the UK could be detrimental to national security – and that it intended to introduce a precautionary power to block listings on national security grounds, with a consultation in 2021.

Scope of the proposed new power

The Government is proposing that the new power to block listings on national security grounds would:

• Apply alongside other existing protections and safeguards in place in the UK (such as the criminal checks undertaken as part of the Senior Managers and Certification Regime and the anti-money laundering and sanction framework).
• Be narrowly focussed on national security grounds – and therefore would be expected to have a minimal impact on the listing process and on the vast majority of companies seeking to raise capital.
• Cover all initial equity listings and admissions on UK public markets.
• Require companies that are proposing to list to make additional disclosures to allow for the purposes of national security screening.
• Potentially allow companies to obtain reassurance on the application of the power to their listings by engagement with Government before they reach the point of submitting routine admission documents such as the prospectus.

Next steps

The consultation closed on 27 August 2021 and the Government is now considering responses.  Once it has done so, it expects to publish a formal response. It also anticipates issuing further technical consultations as its proposals for the power develop.

This article is part of our biannual Public Company Update – sign up to receive this newsletter using the subscribe button. For more information on the above please contact Paul Stone or your usual Charles Russell Speechlys contact.