New National Security and Investment Regime enters into force

The National Security and Investment Act 2021, which introduces a new national security screening regime, entered into force on 4 Jan 2022. This requires the mandatory notification of acquisitions of control of companies involved in 17 “sensitive areas of the economy” (including communications, computing hardware, data infrastructure, space and satellite technologies and quantum technologies). Transactions subject to a mandatory notification must be cleared prior to closing or will be void. Completion without the approval can also lead to a fine of up to 5% of an organisation’s global turnover or £10 million, whichever is greater. It is also a criminal offence subject to up to 5-year imprisonment.

Critically, the NSIA also applies to transactions involving companies outside the UK that supply goods and services to the UK, as well as internal corporate restructurings. Acquisitions of assets and lower levels of investment are also covered (although not subject to the mandatory regime). The UK government may review (call in) transactions closed after 12 November 2020.

Voluntary notifications can be made for transactions not subject to the mandatory regime, and there is also scope for informal engagement. The standard review assessment, which applies to all notified transactions, lasts up to 30 working days. Transactions which raise security concerns can be called in for a further 30 working day assessment period (and +a further 45 working days if needed).

The national security review is separate from any competition /merger control notifications that may be required for qualifying transactions under the Enterprise Act 2002 (as amended). Reference to “national security” as one of the public interest considerations, under section 42 of the Enterprise Act (EA), has been removed whilst defence mergers under section 59 EA can no longer give rise to a special merger situation.

Here is a link to our flow chart which provides a high-level overview of NSI Regime >

For more information, please contact Peter Willis, Anthony Rosen, Ariane Le Strat or Amy Donlevey.

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