The National Security and Investment Act 2021 (‘NSI Act’) introduced a regulatory framework that allows the UK Government to scrutinise and approve certain acquisitions in 17 sensitive areas of the economy that could pose a risk to the UK’s national security. These areas include, but are not limited to, advanced robotics, defence, energy, advanced materials, and artificial intelligence (AI).
For certain acquisitions within these sectors, mandatory notification to the Government is required and these types of transactions are referred to as ‘notifiable acquisitions’. Acquisitions completed before 12 November 2020 do not fall within the NSI Act’s remit and are therefore non-notifiable.
Which entities and assets are covered by NSI Act?
 Entities include:
- companies;
- limited liability partnerships (LLPs);
- any other corporate bodies;
- general and limited partnerships;
- unincorporated associations; and
- trusts.
Assets include:
- land;
- tangible moveable property;
- intellectual property (e.g. ideas, information or techniques with economic value).
Which areas are covered under NSI Act?
 Certain acquisitions in the following sensitive areas of the economy may require the Government’s approval:
- advanced materials;
- advanced robotics;
- AI;
- civil nuclear materials;
- communications;
- computing hardware;
- critical suppliers to the Government;
- cryptographic authentication;
- data infrastructure;
- defence;
- energy;
- military and dual-use;
- quantum technologies;
- satellite and space technologies;
- suppliers to the emergency services;
- synthetic biology; and
- transport.
 What types of acquisitions are covered under NSI Act?
 An acquisition is notifiable if it involves an entity or assets in one of the sensitive areas (‘Qualifying Entities’ and ‘Qualifying Assets’) and meets certain thresholds set by the Government.
In acquiring control of a Qualifying Entity, a transaction will be notifiable if the buyer:
- increases its shareholding OR voting rights from:
- 25% or less to more than 25%,
- 50% or less to more than 50%,
- less than 75% to 75% or more, or
- the buyer acquires voting rights to secure or prevent the passage of any class of resolution governing the entity’s affairs; or
- the acquirer being able to exercise material influence over the qualifying entity’s policy.
In acquiring control of a Qualifying Asset, a transaction will be notifiable if the buyer:
- is able to use the Qualifying Asset to a greater extent than prior to the transaction; or
- becomes able to direct or control how the Qualifying Asset is used or increases its ability to control the Qualifying Asset.
 Does the NSI Act apply to overseas acquisitions?
 Yes, the NSI Act applies not only to UK registered entities and UK based assets, but also to international organisations, if they have a connection to the UK. This includes scenarios where an asset is physically located outside of the UK but is used to produce products used in the UK.
Practical implication for businesses
Businesses involved in mergers, acquisitions or investments must assess whether their transaction falls within one of the defined sectors and meets the thresholds set by the Government, if so, requires governmental approval to the transaction. If a party dealing with a notifiable transaction proceeds without Government approval, the transaction will be void and the parties involved may face civil and criminal penalties including up to two years’ imprisonment or fines of up to £10 million or 5% of turnover (whichever is higher).
How long does the Governmental approval take?
Once a notification form is submitted, the Government aims to reply within five working days to confirm whether the form has been accepted for review. If accepted, the review period will take up to 30 working days. The Government may extend this period if additional review is required.
How can we help?
 If you have any questions about the NSI Act or whether your transaction may trigger a mandatory notification under the NSI Act, please feel free to get in touch with our Corporate & Commercial team.
