11th February 2022

National Security and Investment Act 2021

On 4 January 2022 the National Security and Investment Act 2021 (“NSI Act”) came into force.  The purpose of this legislation is to allow the UK Government to scrutinise and intervene in certain business transactions to protect national security. 

The context is controversy over a continuing trend of UK companies that are regarded as important assets falling into foreign ownership.  While foreign ownership is nothing new, there has been an increase in takeovers where ultimate control rests with owners in countries that are regarded as potential security threats.  But this new law does not only apply to foreign takeovers and investments, it applies to purely domestic transactions as well. 

This note will look at the key points of the NSI Act and consider the implications of this new regime.  It covers a wide range of sectors, all sizes of businesses, and failure to notify can result in a transaction being void and criminal penalties.

Notifiable transactions

The NSI Act brought in a hybrid notification system that allows two routes to notify the Government of certain acquisitions, or investments, that are within the scope of the NSI Act.  If a transaction is notifiable, then the authorisation of the Government will be required before it can complete. 

The legislation also allows the Government to “call in” for review any in-scope transaction it deems may give rise to a national security risk.  It also has retrospective effect, which means the Government can call in any transaction for review that completed after 11 November 2020.      

Mandatory notification

The mandatory notification requirement will be met if the transaction falls within a sensitive sector and the ‘trigger events’ criteria are met:

Trigger events

The acquirer gains control of its target by either:

  • the acquisition of more than 25 per cent, more than 50 per cent, or 75 per cent or more of the votes or shares in the target.
  • the acquisition of voting rights enabling or preventing the passage of any class of resolution governing the affairs of the target.

Sensitive sectors

If the trigger criteria are met and the business being acquired, or invested in, sits within one of 17 sectors, the transaction will need to be notified to the Government, and their consent given before the it can be completed:

Advanced Materials                                     Cryptographic Authentication

Data Infrastructure                                       Transport

Defence                                                      Advanced Robotics

Energy                                                        Artificial Intelligence

Military and Dual-Use                                    Civil Nuclear

Quantum Technologies                                Communications

Satellite and Space Technologies                 Computing Hardware

Suppliers to the Emergency Services            Critical Suppliers to Government

Synthetic Biology

Importantly there are no financial thresholds that must be met, so a minority investment in a small company which operates in one of these sectors would be caught by the legislation

Voluntary Notification

If the transaction is not caught by the mandatory notification requirement, consideration should still be given to whether you will need to voluntarily notify the Government if you believe there to be a risk to national security.

In addition to the trigger events above, the following separate trigger events apply in respect of the voluntary notification regime:

  • The acquisition of material influence over a qualifying entity’s policy.
  • The acquisition of a right or interest in, or in relation to, a qualifying asset providing the ability to use or control the asset (either entirely or to a greater extent).

Failure to notify

If a transaction requires mandatory notification, and it does not get approval to complete, the transaction will be void.  There may also be civil and criminal penalties, with possible fines up to £10 million.

If a transaction is called in for review, and it is decided there are national security risks, the Government can impose necessary and appropriate remedies in order to mitigate the risk.

Timescales and implications for transactions

Within 30 working days of notifying the Government, which can be done through a dedicated website, they will either:

  • clear the acquisition and tell you it can go ahead
  • call in the acquisition for a full national security assessment
  • require further information, which you should provide as soon as possible, to help complete the assessment
  • require you or people involved in the acquisition to attend a meeting

The Government advise that they expect most notifications to be cleared rather than called in.

If the notification is called in, a further assessment period of 30 working days could take place, subject to any extensions to this.

The notification and approval process will need to be factored into any transaction that will be caught by the provisions on this legislation.

If you wish to discuss the provisions of this legislation or any matters you have in connection with your business, speak to a member of the Blackadders Corporate & Commercial team working in Aberdeen, Dundee, Edinburgh, Glasgow, Perth and across Scotland.

Richard Wilson, corporate solicitor

Richard Wilson, Senior Solicitor
Corporate & Commercial
Blackadders LLP


The opinions expressed in this site are of the author(s) only and do not necessarily represent the opinions of Blackadders LLP.

Blackadders takes all reasonable steps to ensure that the content of this site is accurate and up to date. The site is not, however, intended as a substitute for seeking legal or other professional advice but rather as an informative guide to the services provided by Blackadders and topical legal developments. Site visitors should always seek advice tailored to their specific situation. Consequently, Blackadders accepts no responsibility for any loss or damage suffered by anyone acting or failing to act on the basis of information contained on this site. Downloading of material contained on this site is at the user’s own risk and all necessary virus checks must first be carried out by the user. Blackadders is not responsible for the material found on any web sites linked to this one and links to this site may only be made with Blackadders prior consent.


Blackadders owns the copyright in this blog and all material contained on it. The material on this site may be downloaded for personal use only and must not be altered. Otherwise, Blackadders’ written consent is required before any material on this site is reproduced, copied or transmitted in any way.

Privacy Statement

Information passed to us via this site is kept confidential and will not be disclosed to third parties except if authorised by you or required by law.

© Blackadders LLP 2022

Members of the Law Society of Scotland.

Blackadders Solicitors is a trading name of Blackadders LLP, a limited liability partnership, registered in Scotland No SO301600 whose registered office is 30 & 34 Reform Street, Dundee, DD1 1RJ. Reference to a ‘partner’ is to a member of Blackadders LLP.

Back to Business Legal News from Blackadders Solicitors