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National Security and Investment Act Annual Report 2023-24 – What have we learned?
Glafkos Tombolis
The Cabinet Office has published a report following the government's first statutory review of the performance of the Notifiable Acquisition regulations (NARs), the statutory instrument which sets out the detail of the 17 specified sectors of the economy subject to mandatory notification requirements under the National Security and Investment Act 2021 (NSIA).
The Secretary of State’s overall conclusion is that the NARs are largely successful in meeting their objectives, although some improvements are “possible”, in particular:
- The Artificial Intelligence specified sector could arguably be made broader, to cover specifically generative AI and other emerging technologies;
- It was acknowledged that the Advanced Materials specified sector could be simplified, possibly by carving out Semiconductors and Critical Minerals into standalone specified sectors.
Whilst not quite an unalloyed clean bill of health, the report does not identify anything materially wrong with the NARs and considers the feedback from respondents to the previous government’s call for evidence on the NSIA, published in November 2023.
Based on this firm’s experience of interpreting and advising on NSIA and, in particular, the NARs, we feel that the report’s conclusions are justified. Although it is undoubtedly the case that national security/foreign direct investment laws such as NSIA impact meaningfully on the speed of execution, or even viability, of corporate transactions, NSIA is, in our view, an example of legislation that is proportionate and relatively clear in its scope and application. That said, we hope that the government does make the incremental drafting changes to and/or publishes updated guidance in respect of the specified sectors identified in the call for evidence responses as requiring attention to make good legislation even better.
Further information
We have considerable experience advising potential buyers, sellers, and investors on how the National Security and Investment Act applies to their transactions and managing the notification process. Please do get in touch here if you would like to discuss this further.
About the author
Glafkos Tombolis advises a broad range of corporate and private clients on M&A, joint ventures, private equity and growth capital transactions and general company law matters.
We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
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