UK National Security and Investment Act is now in force

The UK National Security and Investment Act (NSI) came into force on 4 January 2022

The Act introduces new powers for the government to investigate and, if necessary, intervene in investments, takeovers and other acquisitions that could potentially harm the UK's national security.

It also requires businesses and investors to notify the government of certain qualifying acquisitions across 17 sensitive areas of the economy, including defence, transport, artificial intelligence and advanced materials and robotics.

Qualifying acquisitions may include those of:

• an asset - such as land, tangible moveable property or intellectual property
• an entity - such as a company, a limited liability partnership, any other body corporate, a partnership, an unincorporated association or a trust

The Department for Business, Energy & Industrial Strategy (BEIS) has published comprehensive guidance to help businesses understand the new regime.

This guidance explains the steps you need to take to meet your obligations under the Act:

1. Check if the new rules apply to your acquisition. This will depend on what you are acquiring and how much control you have over it.
2. Check if you need to tell the government about your acquisition. You will be legally required to inform the government about certain acquisitions of entities if your acquisition is in a sensitive area of the UK economy.
3. If required, tell the government about your acquisition. You can do this online by submitting a notification.
4. The government will review your acquisition. It can either clear your acquisition, impose certain conditions, or block or unwind it.

If clearance under the NSI Act is required, a transaction completed without clearance will be void, and failure to notify or non-compliance with conditions imposed on a transaction can result in civil injunctions, fines of up to 5 per cent of global revenues or £10 million (whichever is greater), or even instituting criminal proceedings.

Access comprehensive guidance to help you comply with the NSI Act.

Guidance is also available on the government's new powers to call-in for review mergers and acquisitions outside of the 17 specified sectors, if it believes they pose a threat to national security. See the statement about the exercise of the call-in power.

The Act is administered by the Investment Security Unit (ISU) at BEIS and applies to deals made on or after 12 November 2020. For general enquiries or advice about the Act, you can contact the ISU at investment.screening@beis.gov.uk.

First published 13 January 2022