The Government has been warned that moves to limit foreign takeovers could have a major impact on investment in the UK.

Under plans which are believed to be under consideration, directors could be jailed or companies fined if they fail to report takeover bids which could put national security at risk.

Growing concerns over China's influence, disagreements with Beijing over Hong Kong and increased vulnerability due to the coronavirus pandemic are thought to be behind the move.

Roger Barker, head of corporate governance at the Institute of Directors, told the Guardian: "Safeguarding national security is the Government's prerogative.

"However, to avoid a chilling effect on foreign investment in such a challenging economic environment, it's crucial that any interventions are based on legitimate principles that are implemented in an impartial and non-political manner - ideally in co-ordination with international partners.

The Confederation of British Industry has also warned against limiting foreign investment.

A statement said: "Foreign investment will be critical to economic recovery efforts, so it's important that the UK signals to the world that we are open for business.

"All investment comes with risk and any safeguards should be evidence-based and applied equally to all countries.

According to the Times, Prime Minister Boris Johnson wants UK companies to declare when a foreign company tries to buy more than 25 per cent of shares, assets or intellectual property.