The National Security and Investment Act 2021 (NSIA) came into force on 4 January 2022 and provides the Government with powers to scrutinise and potentially intervene in business transactions, such as acquisitions and investments, in order to protect national security.
Our Corporate Solicitors explore the complexities of the National Security and Investment Act 2021, guiding businesses through the legal requirements for acquisitions, ensuring compliance with national security regulations, and helping you navigate potential transaction risks.
What is the NSIA, and who does it affect?
The NSIA Regime relates to transactions involving the acquisition of certain thresholds of control in qualifying entities or assets.
Qualifying entities include UK companies, partnerships, trusts and other corporate bodies, whilst assets comprise land, moveable property and information with economic value, to name a few.
Suppose a qualifying entity is involved in particular activities within certain high-risk sectors of the economy.
In that case, companies are now required to notify the Government of any potential national security issues through either a mandatory or a voluntary notification, and the Government has the authority to unwind or block an acquisition accordingly.
Acquisitions completed before 12 November 2020 are exempt from this.
What do I need to consider before selling my business?
Things to initially consider as the seller:
- Does the seller plan to sell more than 25% of the company's voting shares or voting rights or a right or interest in or about a qualifying asset providing the ability to use the asset or direct or control how the asset is used?
- Does the company supply any customers that could be connected to the UK's national security, even if indirectly?
- Do the company's operations provide access to sensitive information?
- Does the company operate at locations that may present national security concerns or near government facilities?
- Does the company operate in any of the 17 mandatory notification sectors?
What are the next steps if the NSIA applies?
- The NSIA should be incorporated into the timetabling discussions with all key stakeholders, such as lenders, customers, suppliers, and employees
- Flag that the Government's call-in power also applies to "arrangements … in process or contemplation" (this could include any of the first steps in a transaction process) and so if the seller concludes that the NSIA is engaged, it should consider seeking guidance at the outset.
- Consider the buyers/investor, as the Government is more likely to approve a transaction if it is comfortable with the identity of the buyer/investor
- Reconsider the scope of the transaction: if the entity or assets causing the national security risk are not essential to the transaction's value, could a pre-deal reorganisation or hive-out be implemented to ensure that the buyer/investor does not gain control of the relevant entity or assets?
- Expect buyers to conduct enhanced due diligence to assess whether the NSIA could apply.
What are the next steps as the buyer?
A key issue for companies to consider is whether their transaction requires mandatory notification or voluntary notification, as well as ensuring that the regime is factored into deal timelines and documentation to manage the risks of delay or Government intervention.
If an acquisition involves a sensitive UK business and meets the Government's criteria, the Buyer must notify the Government or the acquisition will be void. This is a mandatory notification.
Things to note:
- Submit a formal notification within 17 working days after the deal closes.
- The Government has 30 working days to review the transaction, with an option to extend it.
- The Government may approve, impose conditions, or block the deal if national security is at risk.
- The Government can still intervene or reverse the transaction if no notification is submitted.
For deals outside the mandatory criteria, businesses can notify the Government voluntarily.
This is useful if there's uncertainty about potential national security concerns, and it ensures the deal won't face surprise interventions later.
Once submitted, the Government will review it within 30 working days.
If you are still determining if an acquisition you plan to enter falls within the scope of the NSIA, you should seek professional advice.
- Offences include failing to comply with interim, final, or attendance orders, completing a notifiable acquisition without approval, and disclosing information in contravention of the provisions.
- Penalties include reminders, warning letters, remedial action, and monetary penalties, with the maximum penalty for businesses being 5% of turnover or up to £10 million (whichever is higher).
What does the future hold?
In the future, the Secretary of State may use secondary legislation to extend the types of acquisitions subject to mandatory notifications and exempt certain acquirers from the mandatory notification regime.
Our Corporate Solicitors at Myerson are here to help you navigate the complexities of the NSIA.
We provide expert advice on compliance with national security regulations and the mandatory and voluntary notification process and help you understand how to manage the risks of potential delays or Government intervention in your deal.
If you're uncertain whether your transaction falls under the scope of the NSIA or need guidance on how to proceed, contact us on:
01619414000
More Corporate Law Advice and News
Autumn Budget 2026: What Business Owners and Shareholders Need to Know
On 28 October 2026, Chancellor John Healey delivered the highly anticipated Autumn Budget , announcing a range of measures aimed at supporting economic growth and investment across the UK. Whilst some of the changes may create opportunities for new businesses and for existing businesses to expand and invest, others are likely to result in...
Read Blog
Family Investment Companies: The Legal Framework Behind Effective Governance
A family investment company (commonly known as a FIC) is not a distinct legal entity created by special legislation. It is usually a private company limited by shares, incorporated under the Companies Act 2006 with a constitution and share structure that has been constructed or adapted to hold and manage family investments in a tax-efficient...
Read Blog
International M&A: Key Concepts Every Business Should Understand
International mergers and acquisitions (M&A) are an increasingly important way for businesses seeking growth beyond their domestic markets. Whether acquiring an overseas competitor, entering a new jurisdiction, securing innovative technology, or attracting foreign investment, cross-border transactions can unlock significant opportunities...
Read Blog
Charity Trustees: Key Duties and Governance Risks
The International Day of Charity , marked each year on 5 September, highlights the importance of global charity work in addressing humanitarian crises, alleviating poverty and responding to a range of social issues. Whilst the day celebrates the positive impact of charities, their ability to deliver that impact depends heavily on effective...
Read Blog
Accountancy Practice Succession and Exit Planning: A Legal Guide
For many accountancy practice owners, building a successful business can take decades. Yet when the time comes to retire, reduce involvement, or move on to a new venture, the absence of a clear exit strategy can significantly impact both value and continuity. Whether your objective is to achieve a clean exit, secure the long-term future of the...
Read Blog
Funding a Management Buyout: Key Options for Sellers and Management Teams
Management buyouts (MBOs) are becoming an increasingly popular succession planning option for owner-managed businesses. However, funding is often one of the most significant challenges, as management teams rarely have sufficient personal resources to fund an acquisition outright, meaning careful consideration needs to be given to how the purchase...
Watch Webinar