United Kingdom 2015 (English & Chinese)

Simon Weller

Freshfields Bruckhaus Deringer LLP

a. What are the key sectors in your jurisdiction that attract, or to which the government is seeking to attract, COI?

The UK government, through the UK Trade & Investment department, has detailed a wide range of sectors in which it is seeking to attract COI including aerospace, automotive, energy, information and communication technologies and life sciences. Notable COI in the UK includes:

(a) oil and gas, e.g. PetroChina's oil refining and trading joint venture with INEOS;

(b) infrastructure, e.g. China Investment Corporation's acquisition of a 10% stake in Heathrow Airport Holdings;

(c) real estate, e.g. Dalian Wanda's acquisition of a development site on London's South Bank; and

(d) nuclear, e.g. the proposed (and UK government approved) joint investment by China General Nuclear Power Group and China National Nuclear Corporation in a 30-40% stake in the consortium developing the Hinkley Point C nuclear reactor.

b. Is the government generally supportive of COI? Which government, and regional, bodies are responsible for driving COI in your jurisdiction?

The UK government expressly welcomes Chinese investors. At a speech to students at Peking University in 2013, George Osborne (the UK's Chancellor of the Exchequer) stated “one of my principal goals this week is not just to increase British investment in China. But to increase Chinese investment in Britain… Indeed I would go as far as to say that there is no country in the west that is more open to investment – especially from China”.

In mid-2014, David Cameron and Premier Li Keqiang signed trade deals worth £14 billion and the China Development Bank signalled its intention to invest further in next generation nuclear plants, the High Speed 2 rail link and telecommunications in the UK.

UK Trade & Investment has the main responsibility for driving foreign direct investment (FDI) in the UK. For COI specifically, they work with the China-Britain Business Council, which has a presence in 13 cities across China.

a. What are the most common legal entities and vehicles used for COI in your jurisdiction? How long do they take to become operational?

Foreign investors will generally use a legal entity that most suits their corporate and tax structuring goals (and it could be incorporated outside the UK, although UK regulators can occasionally be wary of the use of acquisition entities incorporated in jurisdictions perceived as offshore tax havens). The most common UK legal entity is a limited liability company (which could be private or public, with the key distinction being that only public limited companies may offer shares to the public). Other business vehicles include partnerships, limited liability partnerships and branches of overseas companies. All of these entities and vehicles may be established and become operational within a short period of time.

Joint ventures between Chinese companies and established UK companies are often used to gain experience of working in the UK, e.g. the Beijing Construction Engineering Group partnered with Carillion, the British construction company, on the £800 million development of Airport City Manchester.

b. What are the key requirements for establishment and operation of these vehicles which are relevant to COI (e.g. is there a requirement for local directors)?

Chinese investors may establish and operate any of these vehicles in the same manner as local investors and no regulatory approvals are required to set up these vehicles in the UK. There are no residency requirements for directors of a UK company, although there may be tax residency considerations which affect the location of management.