National Security and Investment (NSI) Act 2021 .

Article | Rachel Blunt | 11th July 2023

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The National Security and Investment Act (NSI) came into force on 4 January 2022. This new, more extensive national security regime contains powers to examine mergers and acquisitions for the purposes of national security.

The Act reflects a global trend for more intervention in, and scrutiny of, national security issues, and is indicative of a governmental agenda to evaluate certain acquisitions for potential implications on national security. The Act separates business transactions into those requiring mandatory notification and those with voluntary notification. The condition below determines whether a notification is mandatory or voluntary, based on the level of control being acquired:


  • Where the level of control passes either 25%, 50% or 75%, or
  • voting rights acquired allow the passing or blocking of resolutions.


  • The acquirer becomes able to materially influence (commonly 15% or more) the strategic direction of the entity g. by acquiring the right to appoint members of the board.
  • The acquirer becomes able to use a qualifying asset, or direct or control its use, or can do so more than prior to the acquisition.

Voluntary notifications are a means of obtaining a decision in relation to a transaction which doesn’t fall within the mandatory notification requirements but may still be of interest to the government.

Transactions covered

In-scope transactions, referred to as ‘‘trigger events’, are those which meet all the below conditions:

  • The acquisition of a right or interest in a qualifying asset or entity where the entity or asset being acquired is from, in, or has a connection to the UK.
  • Qualifying entities are any entity, excluding individuals.
  • An entity with a connection to the UK either carries on activities in the UK or supplies goods or services to people in the UK.
  • Qualifying assets are land, tangible moveable property, and intellectual property. An asset with a connection to the UK is either used in connection with activities carried on in the UK or used in connection with the supply of goods or services to people in the UK.
  • The acquisition meets or passes a certain threshold (for example, your stake or voting rights in a qualifying entity becomes higher than 25%)
  • The acquisition was not completed before 12 November 2020. Where an acquisition extends over multiple days, it is treated as taking place on the last day of the period.

If this qualifying acquisition is of an entity in one of the 17 defined sensitive areas of the economy:


Advanced Materials Critical Suppliers to Government Quantum Technologies
Advanced Robotics Cryptographic Authentication Satellite and Space Technologies
Artificial Intelligence Data Infrastructure Suppliers to the Emergency Services
Civil Nuclear Defence Synthetic Biology
Communications Energy Transport
Computing Hardware Military and Dual-Use


Whilst prior to this Act, the Enterprise Act of 2002 gave the government certain powers to examine mergers, the NSI Act covers significantly more transactions with Government now being more likely to intervene in transactions.

Potential government response

Following notification, where the government deems an acquisition to be high-risk for the UK’s national security, it has the power to intervene either by enforcing conditions on the transaction, or in extreme cases, by blocking a deal completely. Since the powers have been brought in, hundreds of mandatory notifications have been reviewed by the government, with three deals having been blocked and plenty further being subjected to increased scrutiny.

What does this mean?

Now the regime is in force, the key issue for companies to consider is whether their transaction requires any notification, as well as ensuring that the regime is factored into deal timelines to manage the risks of delay or government intervention.

Whilst the lawyers involved in the transaction will likely be able to assist with any notification requirements, PEM’s primary advice is to get this dealt with as soon as possible to avoid delays. PEM can assist your lawyers regarding the requirements, providing the knowledge and background required to assist with their assessment of whether the requirements to notify apply to the transaction.


Where mandatory notification was required, but the entity failed to do so, or the notification is not approved by the Secretary of State, consequences include the transaction being void, a fine of up to the higher of £10million or 5% of total worldwide turnover and up to five years imprisonment for the individuals involved.

Failure to voluntarily notify doesn’t mean the transaction can’t go ahead but gives the Secretary of State power to review a transaction subject to certain timeframes.

If you are looking to buy or sell a business and would like to discuss whether these rules will impact your transaction, please contact us at

About the author

Rachel Blunt

Rachel joined PEM in 2018 after graduating from the University of Leeds in 2017 with a first in Maths & French.

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