Introduction
The UK Government introduced the National Security and Investment Act (NSIA) 2021 to modernise its approach to safeguarding national security amid increasingly complex global investment landscapes. Effective from 4 January 2022, the Act grants broad powers to scrutinise – and, where necessary, intervene in – business acquisitions that may pose a risk to national security. This regulatory blog outlines the scope, obligations, and recent proposals to revise the framework.
What Is the NSI Act 2021?
The NSIA empowers the UK Government to review, block, or impose conditions on investments or acquisitions that could threaten national security. Key features include:
- Applicability to both UK and foreign investors
- Coverage of acquisitions of control over entities and assets
- Mandatory pre-approval for acquisitions in certain sensitive sectors
Who Needs to Report?
Any individual or entity acquiring a qualifying interest – such as 25%, 50%, or 75% of voting rights or shares – in a company engaged in sensitive activities may be required to notify the UK Government before completing the deal. This is known as a “Notifiable Acquisition.”
When to Report
- Mandatory notification is required for acquisitions involving entities active in any of the 17 specified high-risk sectors (proposed to expand to 19).
- Notification must be submitted before the transaction closes.
- Voluntary notification is encouraged if a transaction may pose national security risks but falls outside the mandatory scope.
Sensitive Sectors Requiring Mandatory Notification
The 17 sectors currently include:
- Advanced Materials
- Advanced Robotics
- Artificial Intelligence
- Civil Nuclear
- Communications
- Computing Hardware
- Critical Suppliers to Government
- Cryptographic Authentication
- Data Infrastructure
- Defence
- Energy
- Military and Dual-Use
- Quantum Technologies
- Satellite and Space Technologies
- Suppliers to the Emergency Services
- Synthetic Biology
- Transport
Where and How to Report
Notifications can be submitted via the UK Government’s NSI notification service or by emailing the completed form to: investment.screening@cabinetoffice.gov.uk
What Happens After Submission?
Once submitted:
- The Investment Security Unit (ISU) will confirm receipt.
- The Government has 30 working days to assess the notification (extendable to 45 + 30 working days for detailed review).
- Outcomes may include clearance, conditional approval, or prohibition.
Recent and Proposed Changes (2025 Consultation)
On 22 July 2025, the UK Government launched a consultation (closing 14 October 2025) aimed at reducing unnecessary burdens and sharpening focus on genuine risks.
Key Proposals Include:
Exemptions for Low-Risk Transactions
- Internal reorganisations and insolvency-related appointments may be excluded from mandatory notification.
Restructuring of Existing Sectors
- Critical Minerals and Semiconductors to become standalone sectors
- Advanced Materials sector to be narrowed
Revised Sector Definitions
- Artificial Intelligence: Excludes generic use of off-the-shelf tools
- Communications: Introduces a turnover threshold to exclude small providers
- Data Infrastructure: Includes private data centres and cloud providers
- Energy: Sets thresholds for aggregators; includes multi-purpose interconnectors
- Water Utilities: Proposed as a new sector
Next Steps
As the UK continues to refine its investment screening regime, it’s vital for businesses and investors to stay informed and compliant. If your organisation is involved in acquisitions within sensitive sectors, ensure you understand your reporting obligations under the NSIA.
To contribute to the ongoing consultation or seek guidance, visit the UK Government’s NSI portal or contact the Investment Security Unit directly. Staying proactive today could safeguard your investments tomorrow.
