UK Government calls for evidence on the National Security and Investment Act regime

The UK Government has issued a Call for Evidence to gather stakeholders' views on how the National Security and Investment Act 2021 (NSIA) regime could be made more business-friendly while maintaining and refining the protections needed to protect national security.

The Deputy Prime Minister, Oliver Dowden, has stated that any changes to the regime will be based on a "small garden, high fence" approach, as the goal is to protect the UK from a small number of harmful deals while leaving most transactions unaffected. The Call for Evidence makes clear that the Government is considering the need for secondary legislation and further guidance, rather than the potential introduction of new primary legislation.

The NSIA came into force on 4 January 2022 and has enabled the Government to scrutinise and intervene in acquisitions that could harm the UK's national security, by requiring mandatory notifications for transactions in 17 key sectors. Since the introduction of the NSIA, businesses, other stakeholders and the Government have been acquiring experience in the operation of the new regime and assessing whether improvements could be made.

The Government has said that it will use feedback from the Call for Evidence to:

• clarify and refine the definitions of specified activities in a number of the key sectors;
• consider whether there are any activities within the 17 key sectors that are unlikely to create national security risk;
• hone the scope of the system's mandatory notification requirements, to ensure the Government does not need to be notified of a majority of deals that pose no national security risk, while making sure it is notified of those deals that do warrant consideration. Possible proposals under consideration, and on which views are sought, include introducing some targeted exemptions from the mandatory notification obligation for group reorganisations;
• improve the NSIA notification and assessment processes to minimise business burdens as far as possible, without compromising the Government’s ability to conduct proper scrutiny; and
• develop the Government's public guidance and communications on how the NSIA works and where the Government tends to see risk arising.

The deadline for responses to the Call for Evidence is 15 January 2024. 

We have received a significant number of instructions in relation to the NSIA since its introduction and would encourage businesses whose operations are impacted by the regime to participate in the Call for Evidence to ensure that their views are represented.

If you would like to discuss the issues raised in this blog, please get in touch with our NSIA specialists John Cassels and Asfand Gulzar.