UK
UK Ronan O'Sullivan and Garrett Hayes, Paul Hastings
1. Overview of FDI in the jurisdiction
1.1. Which countries are the principal sources of FDI into your jurisdiction? The UK attracts more FDI than any other European country. In 2012 the UK attracted $62 billion of FDI inflows, with the total value of inward stock at the end of 2012 estimated to be $1.3 trillion.
The main source of inward FDI into the UK is the US. However, in recent years, the UK has been targeting emerging markets, and in 2012 India was one of the top five sources of FDI into the UK. There are also signs that Chinese companies are placing larger projects in the UK, and the number of projects from high-growth economies such as Turkey, South Africa, Malaysia, Mexico, Brazil, the Middle East and Russia continues to increase.
1.2. What are the key sectors in your jurisdiction which attract, or the government is seeking to attract, FDI? The UK government is focussed on high-quality investment projects that generate long-term economic value for and employment in the UK, such as advanced manufacturing, technology, financial services, energy and infrastructure.
1.3. Is the government generally supportive of FDI? Which government, and regional, bodies are responsible for driving FDI in your jurisdiction? The UK government is wholly supportive of FDI, and foreign investors receive the same support as domestic firms.
The Department of Trade & Investment (UKTI) has overall responsibility for FDI. UKTI works with a range of partners such as Invest Northern Ireland, Scottish Development International, the Welsh Government, London and Partners, and Local Enterprise Partnerships to provide assistance to companies looking to establish businesses in or relocate businesses to the UK.
2. Investment vehicle
2.1. What are the most common legal entities and [pass-through] vehicles used for FDI in your jurisdiction, and how long do they take to become operational? Various vehicles can be used for FDI into the UK. The most commonly used vehicles are a company limited by shares, a limited liability partnership (LLP), or an establishment/branch office.
2.2. What are the key requirements for establishment and operation of these vehicles which are relevant to FDI? Limited company There are no rules regarding the establishment and operation of a private company limited by shares which are specific to FDI.
Incorporating a private company is a straightforward process that can be carried out on a same day basis, and without the need for a notary, a bank account or minimum level of share capital (other than a nominal £1).
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Directors manage the company on a day-to-day basis. Private companies must have at least one director who is a natural person. There is no requirement that a director be a UK or EU national or resident.
Establishment/branch An establishment, also known as a branch office, is an office established in the UK which has its own management and the capacity to conduct business with third parties, but which forms part of a company which is not registered in the UK.
Within one month of opening in the UK, all establishments must register with Companies House and provide certain basic information about itself, a copy of its latest accounts and a copy of its constitution.
3. Investment approval
3.1. For foreign investment approval (including national security review) explain the following: a) The regulator/s’ name, factors it must consider when making its deci- sions, and how much discretion it has; b) Any investment caps and other legislative restrictions; c) Which party must notify and when/if notification is mandatory or vol- untary; d) What information must be included with notification and what is the review fee; e) How long does the review and approval process take, and are there any fast-track options; f) Is there the ability to consult on a named or unnamed basis; g) Does notification/review occur pre- or post-closing, and are there any pre- or post filing requirements unique to FDI; h)What is the position if no response is received on an application for approval and are there any rights of appeal from disapprovals?
Not applicable.
3.2. Briefly explain the investment restrictions for any special/restricted sectors. There are a number of sectors in which businesses need appropriate permits or authorisations from a regulator to operate, such as water and sewerage companies (Water Services Regulation Authority), gas and electricity companies (Office of Gas and Electricity Markets (Ofgem)) and broadcasting (Office of Communications (Ofcom)).
Although there is no particular prohibition on FDI into these sectors, the terms of the permits or authorisations may well contain consent rights for the relevant regulator or other provisions which will be relevant for consideration in connection with FDI. These may include an obligation to notify a substantial change of shareholding or a change of control, a requirement for parent company guarantees, an obligation to maintain a minimum number of independent non-executive directors on the board, ring fencing of assets, and an obligation to maintain an investment grade rating.
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IFLR REPORT | FOREIGN DIRECT INVESTMENT 2014
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