Clause 9 - Control of assets

National Security and Investment Bill – in a Public Bill Committee at 5:00 pm on 1st December 2020.

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Question proposed, That the clause stand part of the Bill.

Photo of Nadhim Zahawi Nadhim Zahawi Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), The Parliamentary Under-Secretary for Health and Social Care

Clause 9 sets out, for the purposes of the Bill, the circumstances in which a person gains control of a qualifying asset, as defined in clause 7. A person gains control of a qualifying asset where they acquire a right or interest in, or in relation to, the asset, and as a result they can do at least one of the following.

First, they can use the asset or use it to a greater extent than prior to the acquisition. This would allow the Secretary of State to intervene, for instance, when an individual purchases a sensitive site and can therefore access and use the site. Secondly, they can direct or control how the asset is used, or direct or control its use to a greater extent than prior to the acquisition. This second mechanism by which a person can gain control over a qualifying asset is particularly important as it brings into the scope of the regime those who may not have complete control over the asset, but who can nevertheless still direct or control its operation. Without that, there would be a control loophole that hostile actors may seek to exploit.

It is worth noting the relationship between this clause and clause 11, which provides an exception for control of assets in circumstances where the acquisition is made for purposes wholly or mainly outside the individual’s trade, business or craft. That is intended to put acquisitions such as consumer purchases firmly out of scope of this regime. I reassure hon. Members that the Secretary of State does not routinely expect to call in trigger events relating to assets. However, I hope that the Committee will agree that it is nevertheless important for the Secretary of State to retain this power to guard against hostile actors who seek to acquire control over sensitive assets as an alternative to acquiring the business which owns them.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

Clause 10 ordered to stand part of the Bill.

Schedule 1 agreed to.

Ordered, That further consideration be now adjourned. ––(Michael Tomlinson.)

Adjourned till Thursday 3 December at half-past Eleven o’clock.

Written evidence reported to the House

NSIB01 Dentons UK and Middle East LLP

NSIB02 The Law Society of England and Wales