The UK National Security and Investment Act 2021: A New Regime For Acquisition and Investment Transactions: Update

There have been a number of key developments in the evolution of the UK’s national security regime since our e-bulletin earlier this year (UK to Adopt New Powers Over M&A Activity To Protect National Security). First and foremost, the National Security and Investment Bill has now taken its place on the UK Statute Book as the National Security and Investment Act 2021 (the “Act”). The new legislation is set to come into force on the 4th January 2022.

The Act and its associated secondary legislation will confer powers on the Secretary of State for Business, Energy and Industrial Strategy (“BEIS”), acting through the newly established Investment Security Unit (the “ISU”), to “call-in” transactions involving the acquisition of control or material influence over entities and assets where those transactions involve national security considerations. The Act will also mandate the prior notification and clearance of any acquisitions of material influence over entities which are active in one or more of 17 prescribed “sensitive” sectors. Those prescribed sectors are considered in more detail below but we would highlight at the outset that (in addition to defence, civil nuclear and military and dual use technologies) they include advanced materials, artificial intelligence, communications, data infrastructure, suppliers to the emergency services and transport. The new notification and clearance regime will therefore have application to a broad range of acquisitions and investments.

Significantly, once the Act comes into force, the call-in powers referred to above will apply to any qualifying transaction completed from the 12th November 2020 onwards. We discuss the implications of this for current investment and M&A activity later in this note.

More information is available here.