Policy paper

Overview of the Investment Security Unit factsheet

Updated 3 March 2021

This was published under the 2019 to 2022 Johnson Conservative government

This policy paper was withdrawn on 3 November 2021

This page is out of date. Read the latest guidance on how to prepare for new rules around acquisitions which could harm the UK’s national security.

The Investment Security Unit (ISU) will be a new operational unit within the Department for Business, Energy and Industrial Strategy. It will be responsible for identifying, addressing and mitigating national security risks to the UK arising when a person gains control of a qualifying asset or qualifying entity as set out in the National Security and Investment Act.

The Investment Security Unit will operate the National Security and Investment regime which:

• establishes a requirement for companies and entities making acquisitions specified in regulations (‘notifiable acquisitions’) to notify the Secretary of State and seek approval before completing such acquisitions
• creates a voluntary notification system to encourage notifications from parties who consider that their transaction or other acquisition may raise national security concerns (where the business in question is not one of those automatically required to notify)
• enables the Secretary of State to ‘call in’ statutorily defined transactions or other events to undertake a national security assessment (whether or not they have been notified to the government)
• creates the power to apply remedies to address risks to national security, sanctions for non-compliance with the regime and the mechanism for legal challenge^{[footnote 1]}

Housing the Investment Security Unit in the Department for Business, Energy and Industrial Strategy enables the Unit to draw on the Department’s expertise in engaging with business and running critical national infrastructure with national security considerations.

When will the Investment Security Unit be formed?

Businesses are already able to contact the Investment Security Unit should they require advice on any aspect of the new regime. They can email investment.screening@beis.gov.uk.

The full Investment Security Unit is currently being set up in preparation for the National Security and Investment regime commencing by the end of the year.

How will the Investment Security Unit assess the notifications it receives?

The new regime will require acquirers making investments in 17 sectors to notify and receive approval from government before completing certain types of transactions^{[footnote 2]}. Acquirers who fail to give notice to the Investment Security Unit of a notifiable acquisition may face legal action.

In cases where mandatory notification does not apply, sellers, acquirers, or other relevant parties can submit a voluntary notification. Parties may wish to do this if they think their transaction may have national security implications.

Of those transactions that are notified, we expect that fewer than 10% will face a detailed national security assessment. We therefore expect most transactions to be cleared quickly.

Detailed assessments will take full account of the range of security risks of investment into the UK. We expect only a small proportion of such assessments will result in government intervention.

All transactions will be suitably screened using cross-government expertise. Processes to do this swiftly will be in place before the launch of the new regime.

What should businesses do if they think a transaction taking place prior to the regime commencing could be called in by the Investment Security Unit under the National Security and Investment regime?

The National Security and Investment Act contains a provision that enables the Secretary of State to call-in acquisitions that occur after the date the Bill was introduced in Parliament. This provision will ensure that parties cannot accelerate acquisitions to avoid scrutiny.

It is important to emphasise that the mandatory notification element of the regime is not retrospective and there is no obligation on parties to notify the Investment Security Unit of a transaction before the regime begins. The government will provide guidance for businesses on how the process will work before the launch of the new regime.

We do wish to help parties to understand the new regime and, if possible, provide an initial view of whether a transaction is likely to be within the scope of the Act. Until commencement of the National Security and Investment regime, we are unable to provide any blanket assurance an acquisition will not be the subject of a call-in notice, and as such any advice provided ahead of the regime commencing will not be binding. Nevertheless, we do encourage parties considering transactions to approach the ISU for initial advice.

The Investment Security Unit has already provided such advice to a number of businesses and will continue to do so.

1. https://www.gov.uk/government/publications/national-security-and-investment-bill-2020-factsheets/overview-of-the-national-security-and-investment-nsi-bill-factsheet ↩

2. https://www.gov.uk/government/consultations/national-security-and-investment-mandatory-notification-sectors ↩