UK


3.3. Which authority oversees competition clearance, when is notification mandatory, and briefly explain the merger clearance process. Mergers that have a ‘Community Dimension’ will fall within the jurisdiction of the European Commission, which is outside the scope of this note.


Under the UK system, a merger situation arises where two or more enterprises cease to be distinct and either a 25% market share test is triggered or the turnover of the target exceeds £70 million ($114 million). There is no requirement to notify a merger in advance for clearance. However, by proceeding without clearance the buyer takes a risk that the merger may subsequently be referred to the Competition Commission which could lead to it being prohibited or to onerous conditions being imposed.


4. Tax and grants


4.1. Are there tax structures and/or favourable intermediary tax jurisdictions that are particularly useful for FDI into the country? Typical entities used to make corporate acquisitions in the UK include English limited companies, Dutch coops/BVs and Luxembourg companies.


4.2. What are the applicable corporate tax rates? From April 1 2013, the main corporation tax rate is 23% for companies whose taxable profits exceed £1.5 million per annum. This will reduce to 21% from April 1 2014 and 20% from April 1 2015. Companies whose taxable profits do not exceed £300,000 per annum are charged a ‘small profits rate’ of 20%, with a sliding rate of corporation tax from 23% to 20% for companies whose taxable profits are between these amounts.


4.3. Does the government have any FDI tax incentive schemes in place? The new patent box regime provides a reduced 10% rate of corporation tax on profits from the development and exploitation of patents. The regime is being phased in over five years from April 1 2013.


Incentives may also be available for certain research and development expenditure


4.4. Other than through the tax system, does the government provide any other financial support to FDI investors? Through various government development agencies and local business support organisations, a wide range of grants and incentives are available to support businesses in the UK. This includes the UK Regional Growth Fund, which aims to create economic growth and sustainable employment in England, and 24 Enterprise Zones in England which offer incentives designed to support both new and expanding businesses.


There are also various grants and incentives available in Northern Ireland, Scotland, and Wales.


5. Operating locally


5.1. What is the most common governing law of contracts and local business language? English law is the most common governing law of contracts (although Scots and Northern Irish law may also apply, particularly in relation to contracts specific to those jurisdictions).


The local business language in the UK is English.


5.2. Explain any local content or local participation requirements relevant to foreign investors. Save as set out elsewhere in this note, there are none.


5.3. How difficult is it for foreign investors to secure expatriate visas for shareholder representatives and workers? Nationals of countries in the European Economic Area and Switzerland generally have a right to live and work in the UK.


For people from outside these regions, the UK government has introduced new rules to enable visa applications for entrepreneurs and high value investors to be fast tracked. There are also special rules enabling multinational companies to transfer their employees to the UK.


5.4. What foreign currency or exchange restrictions should foreign investors be aware of? None


5.5. Does the country prohibit domestic companies from doing business in any foreign jurisdictions? The UK from time to time puts in place trade controls such as arms embargoes, import licensing, financial sanctions, travel bans and export licensing, generally at the instigation of the UN, EU or Organisation for Security and Co-operation in Europe.


Details of current arms embargoes and other restrictions can be found at: https://www.gov.uk/current-arms-embargoes-and-other-restrictions


Export licences may need to be obtained for certain categories of products particularly military goods, dual-use goods (civilian goods with a potential military use or application) and associated technology or software depending on their destination. This requirement will apply even if the goods are being exported to a group company in an affected jurisdiction.


6. Legal and regulatory framework


6.1. Are there any other FDI-specific laws that foreign investors must be aware of? There are no legal or regulatory restrictions specific to FDI into the UK. Generally speaking, the same rules apply to overseas owners of, and investors in, businesses as apply to British or European owners and investors.


Common with many countries globally, foreign ownership of airlines is limited. To obtain an operating licence, an EU air carrier must be majority owned and effectively controlled by EU nationals. However, the European Commission is taking steps to reach agreements between the EU and key partners to liberalise these restrictions and has already entered into comprehensive air transport agreements with the US, Canada and Brazil.


Upon privatisation of certain companies, the UK government often retained a so-called golden share which prevents or restricts FDI into those companies, often on grounds of national security. Companies in which the UK government currently holds a golden share include BAE Systems, Rolls- Royce, QinetiQ, National Air Traffic Control Systems and certain dockyards.


In certain other sectors (particularly in regulated industries), prior authorisation may be required before a change of control or a significant investment occurs. Although these apply equally to UK and foreign investors, a number of these are worth mentioning here:


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IFLR REPORT | FOREIGN DIRECT INVESTMENT 2014


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