Enterprise Act 2002

Schedule 6B Control or influence of a person by a foreign power

Section 70A Part 1 Conditions for control or influence 1 (1) A foreign power is able to control or influence the policy of a person for the purposes of section 70A if one or more of the following conditions is met. (2) Condition 1 is that the foreign power holds, directly or indirectly, any of the shares in the person. (3) Condition 2 is that the foreign power holds, directly or indirectly, any of the voting rights in the person. (4) Condition 3 is that the foreign power holds the right, directly or indirectly, to appoint or remove an officer of the person. (5) Condition 4 is that the foreign power has the right or ability to direct, control or influence to any extent, the person’s policy or activities (in whole or in part, and whether directly or indirectly), despite not meeting condition 1, 2 or 3. (6) Condition 5 is that— (a) the trustees of a trust, or the members of a partnership, unincorporated association or other entity, that is not a legal person under the law by which it is governed, would, if they were a foreign power, meet one or more of conditions 1 to 4 (in their capacity as such) in relation to the person, and (b) the foreign power has the right or ability to direct, control or influence to any extent the activities of that trust or entity (in whole or in part, and whether directly or indirectly), or has any other interest in, or right over or in relation to, the trust or entity, or any of the trustees of the trust or the members of the entity, whether directly or indirectly. (7) This paragraph is subject to Part 1A. 2 In this Schedule, “officer”— (a) in relation to a body corporate, means a director, member of the committee of management, chief executive, manager, secretary or other similar officer of the body, or a person purporting to act in any such capacity; (b) in relation to a partnership, means a partner, a person purporting to act as a partner or a person concerned in the management or control of the partnership or who purports to act in the capacity of a person so concerned; (c) in relation to an unincorporated association other than a partnership, means a person who is concerned in the management or control of the association or purports to act in the capacity of a person so concerned. Part 1A Exceptions Introduction 2A This Part applies where a foreign power would (apart from this Part of this Schedule) be able to control or influence the policy of a person (a “newspaper owner”) carrying on a newspaper enterprise for the purposes of section 70A by virtue of condition 1 or condition 2 in paragraph 1 (respectively, “the shares condition” and “the voting rights condition”). State owned investors 2B (1) A foreign power (“the main foreign power”) is not able to control or influence the policy of a newspaper owner by virtue of the shares condition or the voting rights condition where— (a) all of the shares or voting rights that the main foreign power holds in the newspaper owner are held by the foreign power, indirectly, via a state owned investor acting on behalf of the foreign power, (b) where the state owned investor holds, directly, more than 5% but no more than 15% of the shares or voting rights in the newspaper owner, the condition in sub-paragraph (1A) is met, and (c) the total holdings of shares or voting rights in the newspaper owner held, directly or indirectly, by state owned investors acting on behalf of any foreign power of any country or territory is no more than 15% of the shares or voting rights in the newspaper owner (subject to sub-paragraph (1D)). (1A) The condition is that, before the end of the period of 14 days beginning with the acquisition date, the state owned investor— (a) gives the Secretary of State a qualifying notification, and (b) publishes on a website the information in sub-paragraph (1C). (1B) For the purposes of sub-paragraph (1A)— (a) a qualifying notification is a notification that the state owned investor has acquired, or proposes to acquire, shares or voting rights in the newspaper owner, with the result that the state owned investor holds, or will hold, directly, more than 5% of the shares or voting rights in the newspaper owner, and (b) the acquisition date is the date on which the state owned investor acquires shares or voting rights in the newspaper owner, with the result that the state owned investor holds, directly, more than 5% of the shares or voting rights in the newspaper owner. (1C) The information is— (a) the name of the state owned investor, (b) the foreign country or territory of the foreign power on whose behalf the state owned investor is acting, (c) the name of the newspaper owner, and (d) the percentage of shares or voting rights that it holds or proposes to hold in the newspaper owner as a consequence of an acquisition which has resulted or would result in the state owned investor holding, directly, more than 5% of the shares or voting rights in the newspaper owner. (1D) For the purposes of sub-paragraph (1)(c), holdings of a state owned investor acting on behalf of a foreign power of a country or territory other than the country or territory of the main foreign power are to be ignored where they comprise no more than 5% of the shares or voting rights in a quoted company within the meaning given by section 385(2) of the Companies Act 2006. (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2C (1) For the purposes of paragraph 2B, a person is a state owned investor acting on behalf of a foreign power where— (a) condition 1 or 2 is met, and (b) conditions 3 to 5 are met. (2) Condition 1 is that the foreign power holds, directly or indirectly— (a) 100% of the shares in the person, (b) 100% of the voting rights in the person, or (c) the right to appoint or remove a majority of the officers of the person. (3) Condition 2 is that— (a) the trustees of a trust, or the members of a partnership, unincorporated association or other entity, that is not a legal person under the law by which it is governed meet one or more of the requirements set out in sub-paragraph (4), in their capacity as such, in relation to the person, and (b) the foreign power directs or controls the activities of that trust or entity (in whole or in part). (4) The requirements are that the trustees or members— (a) have the right to direct or control, or actually direct or control, the person’s activities (in whole or in part); (b) hold, directly or indirectly, 100% of the shares in the person; (c) hold, directly or indirectly, 100% of the voting rights in the person; (d) hold the right, directly or indirectly, to appoint or remove a majority of the officers of the person. (5) Condition 3 is that— (a) the principal activity of the person is to make or manage investments, and (b) the activities of the person include making or managing investments in countries or territories other than the country or territory of the foreign power (“the overseas investments”). (6) Condition 4 is that the principal source of the funds for the overseas investments is the foreign power or another foreign power of the same country or territory as the foreign power. (7) Condition 5 is that the sole purpose of the overseas investments is to benefit— (a) the foreign power or the public or a section of the public of the country or territory of the foreign power, or (b) where the overseas investments are made or managed for the purposes of a public pension fund of the country or territory of the foreign power, the beneficiaries of that fund. Associated persons 2D (1) A foreign power is not able to control or influence the policy of a newspaper owner by virtue of the shares condition or the voting rights condition where— (a) the foreign power holds shares or, as the case may be, voting rights in the newspaper owner as a result of those shares or voting rights being held by a person who is associated with the foreign power by virtue of being within section 127(4)(a), (b) or (c) (relatives, trustees etc), and (b) the person within section 127(4)(a), (b) or (c) holds no more than 0.1% of the shares or, as the case may be, the voting rights in the newspaper owner. (2) A foreign power is not able to control or influence the policy of a newspaper owner by virtue of the shares condition where— (a) the foreign power holds shares in the newspaper owner as a result of those shares being held by a person who is associated with the foreign power by virtue of being within section 127(4)(a), (b) or (c), and (b) the person within section 127(4)(a), (b) or (c) holds those shares via an investment fund which meets the genuine diversity of ownership condition. (3) For the purposes of sub-paragraph (2)(b)— (a) “investment fund” means— (i) an investment fund within the meaning given by section 236(1) of the Finance (No. 2) Act 2023 (investment funds and investment entities), (ii) arrangements that amount to a collective investment scheme (see section 235 of the Financial Services and Markets Act 2000), or (iii) a collective investment undertaking within the meaning of regulation 3 of the Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773), and (b) an investment fund meets the genuine diversity of ownership condition where— (i) it meets conditions A to C in regulation 75 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001) (read with regulation 76 of those Regulations), or (ii) paragraph (5) of that regulation applies to it. Part 2 Interpretation Interpretation 3 This Part makes provision about the interpretation of this Schedule. Joint interests 4 If a foreign power holds a share or right jointly with another person (whether or not a foreign power), each of those persons is to be taken to hold that share or right. Joint arrangements 5 (1) If shares or rights held by a foreign power and shares or rights held by another person (whether or not a foreign power) are the subject of a joint arrangement between those persons, each of those persons is to be taken to hold the combined shares or rights of both persons. (2) A “joint arrangement” is an arrangement between the holders of shares (or rights) that they will exercise all or substantially all the rights conferred by their respective shares (or rights) jointly in a way that is pre-determined by the arrangement. (3) For the meaning of “arrangement”, see paragraph 12. Calculating shareholdings 6 (1) In relation to a person that has a share capital, a reference to holding any of the shares in that person is to holding any shares comprised in the issued share capital of that person. (2) In relation to a person that does not have a share capital, a reference to holding any of the shares in that person is to holding a right to share to any extent in the capital or, as the case may be, profits of that person. Voting rights 7 (1) A reference to the voting rights in a person is to the rights conferred on shareholders in respect of their shares (or, in the case of a person not having a share capital, on members) to vote at general meetings of the person on all or substantially all matters. (2) In relation to a person that does not have general meetings at which matters are decided by the exercise of voting rights, a reference to exercising voting rights in the person is to be read as a reference to exercising rights in relation to the person that are equivalent to those of a person entitled to exercise voting rights in a company. 8 In applying this Schedule, voting rights in a person held by the person itself are to be disregarded. Shares or rights held “indirectly” 9 (1) A foreign power holds a share “indirectly” if the foreign power has any stake in a person and that person— (a) holds the share in question, or (b) is part of a chain of persons— (i) each of which (other than the last) has any stake in the person immediately below it in the chain, and (ii) the last of which holds the share. (2) A foreign power holds a right “indirectly” if the foreign power has any stake in a person and that person— (a) holds that right, or (b) is part of a chain of persons— (i) each of which (other than the last) has any stake in the person immediately below it in the chain, and (ii) the last of which holds that right. (3) For the purposes of sub-paragraphs (1) and (2), a person (“A”) has “any stake” in another person (“B”) if— (a) A holds any shares or voting rights in B, (b) A is a member of B and has the right to appoint or remove an officer of B, (c) A is a member of B and controls alone, or pursuant to an agreement with other shareholders or members, any of the voting rights in B, or (d) A has the right or ability to control or influence B to any extent, despite not being within paragraph (a), (b) or (c). Shares held by nominees 10 A share held by a person as a nominee for another is to be treated as held by the other (and not by the nominee). Rights treated as held by person who is able to control their exercise 11 (1) Where a person controls a right, the right is to be treated as held by that person (and not by the person who in fact holds the right, unless that person also controls it). (2) A person “controls” a right if, by virtue of any arrangement between that person and others, the right is exercisable only— (a) by that person, (b) in accordance with that person’s directions or instructions, or (c) with that person’s consent or concurrence. Arrangements 12 (1) For the purposes of this Schedule, “arrangement” includes— (a) any scheme, agreement or understanding, whether or not it is legally enforceable, and (b) any convention, custom or practice of any kind. (2) But something does not count as an arrangement unless there is at least some degree of stability about it (whether by its nature or terms, the time it has been in existence or otherwise). Rights exercisable only in certain circumstances etc 13 (1) Rights that are exercisable only in certain circumstances are to be taken into account only— (a) where the circumstances have arisen, and for so long as they continue to obtain, or (b) when the circumstances are within the control of the person having the rights. (2) But rights that are exercisable by an administrator or by creditors while a person is in relevant insolvency proceedings are not to be taken into account even while the person is in those proceedings. (3) “Relevant insolvency proceedings” means— (a) administration within the meaning of the Insolvency Act 1986, (b) administration within the meaning of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or (c) proceedings under the insolvency law of another country or territory during which a person’s assets and affairs are subject to the control or supervision of a third party or creditor. (4) Rights that are normally exercisable but are temporarily incapable of exercise are to continue to be taken into account. Rights attached to shares held by way of security 14 Rights attached to shares held by way of security provided by a person are to be treated for the purposes of this Schedule as held by that person— (a) where apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in accordance with that person’s instructions, and (b) where the shares are held in connection with the granting of loans as part of normal business activities and apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in that person’s interests. Part 3 Power to amend circumstances in which there is control or influence 15 (1) The Secretary of State may by regulations make provision— (a) to change (by increasing or decreasing) the proportion of shares or rights which a foreign power must hold in a person carrying on a newspaper enterprise, whether directly or indirectly, in order for the foreign power to be able to control or influence the policy of a person for the purposes of section 70A; (b) to change (by increasing or decreasing) the proportion of shares or rights which is to be held by persons in a chain of persons for the purposes of determining whether shares or rights are held indirectly; (c) about assumptions which are to be made when determining whether a foreign power is able to control or influence the policy of a person, including assumptions framed by reference to the ownership of shares or voting rights by any person; (d) about the extent to which a foreign power needs to be able to control or influence the policy of a person in order to control or influence that policy for the purposes of section 70A, including provision about a foreign power that is already able to control or influence the policy of a person to some extent being able to control or influence that policy to a greater extent; (e) to change or supplement Part 1 of this Schedule so as to include circumstances (for example, circumstances involving more complex structures) that give a foreign power a level of control or influence in relation to the policy of a person broadly similar to the level of control or influence given by the conditions in paragraph 1; (f) in consequence of any provision made by virtue of paragraph (e), to change or supplement Part 2 of this Schedule so that circumstances specified in that Part in which a person is to be regarded as holding an interest in another person correspond to any of the conditions in paragraph 1, or would do so but for the extent of the interest. (2) The provision that may be made under this paragraph, read with section 124(2)(a), includes— (a) different provision for different descriptions of foreign power, and (b) different provision for different persons or descriptions of person in a chain of persons. (3) Regulations under this paragraph may, among other things— (a) confer a discretion on the CMA; (b) make provision having effect on or after 13 March 2024.