The UK’s new national security investment screening regime will enter fully into force on 4 January 2022. From that date, the National Security and Investment Act 2021 (the ‘NSI Act’) will give the Government the power to review a wide range of investments in businesses that are active in the UK or acquisitions of related assets. While the new regime has the ultimate objective of preventing transactions that could harm the UK’s national security, it will impact a much wider range of deals.
Under the new regime, investments in entities that are active in the UK in 17 specific sectors will have to be notified to the Government and cleared before completion. The notification obligation applies regardless of whether the investor is foreign or UK-based and severe civil and criminal penalties will apply if notifiable transactions are not notified. The underlying transaction will also be void as a matter of English law.
Although 4 January may feel like a long way off, it is now less than three months away. The new NSI regime will have a potentially significant impact on timetables and deal certainty for transactions where closing is due to take place after that date. As a result, it may well be relevant to transactions that are currently being negotiated. It is also notable that, once the regime is in force, the Government will have the power retrospectively to review and call in any transaction that completed on or after 12 November 2020 (the date on which the bill was originally introduced to Parliament).
Filings will be mandatory where the target is active in any of the following sensitive sectors:
|Advanced materials||Critical suppliers to government||Military and dual-use|
|Advanced robotics||Critical suppliers to the emergency services||Quantum technologies|
|Artificial intelligence||Cryptographic authentication||Satellite and space technologies|
|Civil nuclear||Data infrastructure||Synthetic biology|
The assessment of whether a qualifying entity is involved in a specified sector will involve careful analysis of the target’s business alongside the relevant statutory definitions. These are extremely detailed and prescriptive, with some running to several pages.
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