09 Dec 2021

Further guidance published on the National Security and Investment Act

On the 15 November 2021, the government published further guidance in preparation for the commencement of The National Security and Investment (NSI) Act. This guidance helps businesses and investors understand whether the Government must be notified of an acquisition and provides detail on the notification and assessment process. This will come into force on the 4 January 2022

The NSI Act introduces a new Foreign Direct Investment (FDI) regime, allowing the Government to intervene in acquisitions that could harm national security. This follows a global trend as countries across the world tighten up or introduce FDI regimes to protect strategic industries.

Guidance on notifiable acquisitions

The Act introduces mandatory notification for acquisitions across 17 sensitive areas of the economy, including AI, Data Infrastructure and Transport. Conducting an acquisition in one of the listed sectors without notifying and receiving government approvals could be committing an offence.

Fortunately, the new guidance provides welcome clarity on the activities that would result in mandatory notifications. It outlines the scope of the 17 high-risk sectors including definitions, key criteria, and components. The guidance also includes a number of examples for each sector, providing further detail to assess whether an acquisition falls under the Act.

Process

The Government has also updated their existing guidance, National Security and Investment Act: prepare for new rules about acquisitions. This includes details on the content of the 3 online notification forms for mandatory notification, voluntary notification, and retrospective validation. Guidance on how to register for the online service has not yet been published.

The document also includes information on what to expect after submitting a notification. Once a form has been accepted, all acquisitions will fall under a review period which could last up to 30 days. A second assessment period will only apply to acquisitions that are ‘called in’ for a detailed analysis on potential national security risks and actions to address those. This should also take 30 working days but could be extended by an additional 45 working days.

Finally, the guidance also includes sections on confidentiality, compliance, and enforcement. This highlights that the government will inform the acquirer if it intends to notify the public on a call-in. It also provides reassurance that the government is aiming to support acquirers to meet obligations, rather than immediately reaching for powers in the event of non-compliance.

Next Steps

You can access guidance and information about the National Security Act here. techUK will continue to engage with the Government as we move closer towards commencement. Please get in touch with your techUK contact if you would like to discuss the implications of the Act for your business.