Policy paper

The National Security and Investment (NSI) Regime: process for businesses 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This policy paper was withdrawn on 3 November 2021

This page is out of date.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.

Part 1: notification to government

The NSI regime has been developed to allow businesses and investors to notify government of transactions of potential national security concern.

Self-assessment and early discussions with government

If you are contemplating a transaction where an acquisition of control takes place, then the government encourages businesses to submit notification on any relevant transaction.

Businesses may refer to the legislation and the statutory “Statement” to determine whether a transaction falls within scope of the regime. To help, businesses may contact the government for informal discussions at investment.screening@beis.gov.uk.

In advance of the NSI legislation being implemented, the government welcomes informal representations from businesses about transactions which may be in scope of the NSI regime. By contacting investment.screening@beis.gov.uk, businesses may get advice on what to expect from the regime to assist in business planning. The government will not use the “call-in power” before the NSI regime is commenced. Once the Act has commenced, if you have informed us of the transaction, the government will have up to 6 months to call in the transaction. We do not expect many transactions to be affected by this power.

Mandatory notification for some sectors

For transactions involving specific sectors (to be set out in notifiable acquisition regulations), businesses and investors must submit a formal notification, providing as much relevant information as possible for clearance of the acquisition. If you do not seek clearance for a relevant transaction, you may face legal action. The transaction will not be permitted to complete until clearance is given by the government. If you do not submit a notification your transaction will be void.

Notification for the wider economy

If a transaction does not involve a listed sector, but may still have a national security element, businesses, whilst not mandated, are still encouraged to submit a notification. Parties should review the Statement to help them assess the types of transactions that may raise national security concerns.

The types of transactions which should be notified to government include: transactions which do not fall in the mandatory regime but may still raise a national security concern and the acquisition and control of assets, such as security software code and blueprints for sensitive equipment.

Part 2: government assessment of notification

Following a notification, the Secretary of State will have a maximum of 30 working days to decide whether to call in a transaction to further scrutinise a transaction for national security concerns.

Government screening and the information gathering power

The government may request any information, at any time, from any person if it is necessary to inform an assessment of the national security risks of a transaction. This information should be provided as quickly and thoroughly to ensure the government can complete its assessment of the notification in good time.

Part 3: government national security assessment

Once the government has decided that there may be a national security concern in a transaction, there will be a detailed review. The government can then take any action it considers necessary and proportionate to address any national security risk.

Assessment period

Once it decides to scrutinise a transaction, the government has up to 30 working days to do a detailed national security assessment. This can be extended by a further 45 working days. If more time is needed, the government will discuss a possible extension with the relevant businesses and investors.

The government will have powers to require that the businesses and investors provide any information relevant to the transaction. This will help inform the national security assessment. You must comply with any request for information from the government.

During the assessment period, businesses and investors can continue to progress the transaction (unless the government orders otherwise). In the case of a notifiable acquisition, it must not be completed until clearance is given to the appropriate parties.

Government remedies

The government has published information on the types of remedies it expects to use to address national security risks . The government may issue orders forbidding or requiring certain actions to be taken by relevant parties, which in the extreme could include unwinding transactions.

Parties will have the opportunity to discuss any restrictions imposed on them. The government will be under duty to consider these representations if there has been a material change of circumstances.

Conclusion of a security assessment

Relevant parties will be provided with information about all decisions, including details of any conditions imposed, and the consequence of any breach of those conditions, when a national security assessment is concluded.

Once the government has concluded its assessment and made a decision, it cannot revisit its decision (though orders may be amended). However, if it is established that false or misleading information was provided in a notification or in response to an information request – the government can reopen the case.

Civil and criminal sanctions

The proposed legislation creates a number of sanctions, civil and criminal, that will apply in the event of non-compliance. For instance, criminal and civil sanctions are applicable where the acquirer has progressed a ‘notifiable acquisition’ to completion without clearance from the Secretary of State. Therefore we recommend that you engage early with the government and complete the notification process.

Interaction with CMA

Relevant merger situations can be effectively scrutinised by the CMA in parallel to security assessments under the NSI regime.