The Government has announced that the National Security and Investment Act (NSI Act) will come into force fully on 4 January 2022. The changes introduced on this date will represent a significant expansion to investment regulation in the UK. For more on the new regime, please see our previous updates. We also summarise the draft statutory instrument, consultation and guidance issued last month below.
Draft statutory instrument on 17 key sectors published
The Government has published the draft notifiable acquisition statutory instrument (SI) which sets out the proposed descriptions of the 17 key sectors which will be subject to the mandatory notification requirements from 4 January 2022. These are in broadly the same form as the draft published in March 2021, but the definitions have been further refined following additional targeted consultation with stakeholders.
The press release states that the draft SI has been published to update businesses and investors about the mandatory notification requirements ahead of commencement of the NSI Act next year. The contents of the draft SI remain subject to change and the SI has been published for information purposes only. The Government expects to lay the final SI before Parliament later this year.
Consultation on draft call-in power statement launched
A consultation has been launched on the use of the call-in power under the NSI Act which will also come into force on 4 January 2022. The consultation closes at 11.45pm on 30 August 2021. The aim of the statement is to help parties to an acquisition understand whether their acquisition is likely to be called in by the Secretary of State for review and to plan accordingly. The consultation seeks views from businesses, investors and the legal community. Responses will be used to refine the statement before it is laid before Parliament later this year.
Draft statement of policy intent
The draft statement notes that each qualifying acquisition will be assessed on a case-by-case basis, taking account of all relevant considerations and with regard to certain risk factors set out in the statement. These include the target risk, the acquirer risk and the control risk.
The 17 sectors are: advanced materials, advanced robotics, artificial intelligence, civil nuclear, communications, computing hardware, critical suppliers to 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.
Acquisitions of control over qualifying assets are also in scope of the call-in power. This is principally so that acquisitions may be called in if an asset is acquired instead of an entity that owns it, or in the event that an asset, such as land, is located near a sensitive site, which may give rise to a national security risk.
Retrospective use of the call-in power
As mentioned in our previous updates, the call-in power is exercisable for in-scope transactions which took place on or after 12 November 2020. The statement confirms that when deciding whether to call in a qualifying acquisition that has already taken place, the same assessment of risk factors will be applied. Interestingly, according to the draft statement:
"The decision whether to call in a qualifying acquisition after it has taken place will be made according to the risk to national security at the point of the decision rather than the risk to national security at the point that the qualifying acquisition took place".
New guidance published
A suite of new guidance has also been published to assist businesses, investors and their advisers:
- Guidance - the National Security and Investment Act alongside regulatory requirements
- Guidance - National Security and Investment Act: prepare for new rules about acquisitions
- Guidance - how the National Security and Investment Act could affect people or acquisitions outside the UK
- Guidance - National Security and Investment Act: guidance for the higher education and research-intensive sectors
We will continue to update as developments occur on this important change.
- Press release - National Security and Investment Act to be up and running
- Draft statement of the notifiable acquisition regulations showing the acquisitions subject to mandatory notification requirements
- Draft statement on the Secretary of State’s expected use of the NSI call-in power which is open for consultation
- National Security and Investment Act 2021: statement on the use of the power to call in acquisitions