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What you need to know about National Security & Investment Bill

A new UK Government Bill came into force on 4 January 2022 that affects mergers and acquisitions (M&A). Here’s what you need to know about the National Security & Investment Bill (NSI Act):

The Bill introduces, for the first time in UK law, a mandatory notification requirement for acquisitions of qualifying entities in key sectors, known as ‘notifiable acquisitions’. The 17 sectors are:

  1. Advanced Materials
  2. Advanced Robotics
  3. Artificial Intelligence
  4. Civil Nuclear
  5. Communications
  6. Computing Hardware
  7. Critical Suppliers to Government
  8. Cryptographic Authentication
  9. Data Infrastructure
  10. Defence
  11. Energy
  12. Military and Dual-Use
  13. Quantum Technologies
  14. Satellite and Space Technologies
  15. Suppliers to the Emergency Services
  16. Synthetic Biology
  17. Transport

The ‘mandatory notification’ requirements have been brought in for these 17 sensitive areas to avoid potential national security risks. The bill requires that an acquiring party for a qualifying entity or a ‘notifiable acquisition’ must inform the government and get approval before completion.

This NSI Act gives the Government new powers to block and potentially unwind transactions following notification (or call in). However, the Government has indicated that it will do so only as a last resort and only where there is a significant national security concern.

Should completion of such a transaction occur prior to Government approval this may lead to fines of up to 5% global turnover, imprisonment, director disqualification and the transaction being void.

Notification of a relevant trigger event is via submitting an online form to the government (called a ‘mandatory notification form’). The government then reviews the acquisition to see if it could cause a national security risk. If the government clears the acquisition, it cannot assess it again, unless false or misleading information was submitted.

The Competition and Markets Authority, CMA, has issued updated merger control guidance to take account of the impact of the NSI Act. You can check here if you need to tell the government about an acquisition or contact us here for a confidential appraisal of a future company sale.

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