UK government publishes updated guidance on national security powers

UK government

The UK government has published updated guidance on the National Security and Investment Act (2021) to provide further clarity for institutions, businesses and their advisers, while protecting national security. 

The publication from Deputy Prime Minister, Oliver Dowden, fulfils a commitment Dowden made in a speech delivered in April 2024 at Chatham House.

He promised to publish updated guidance about his national security powers to ensure the NSI Act remains as supportive of investment as possible by giving stakeholders the information they need to plan ahead.

The updates include a new ‘section 3 statement’ that sets out how the Deputy Prime Minister expects to exercise powers under the NSI Act to call-in certain acquisitions for scrutiny. This is the first time the statement has been updated since the legislation came into force in January 2022.  

The new statement builds on the previous version by giving more information to better explain how the Secretary of State has used, and will continue to use, the Act’s powers. Specific updates include:

  • Trigger events – including the circumstances in which certain acquisitions could be considered under the NSI Act, including the incorporation of new entities and formation of joint ventures.
  • The targets of acquisitions – including how the Government may consider technology transfer risks when reviewing asset acquisitions.
  • Acquirers – including where the Government may see risk from UK acquirers or acquirers that have previously been cleared through the NSI system.
  • How decisions are made – including improved examples of how the Government assesses target risk, acquirer risk and control risk

The UK government has also published additional Market Guidance about the operation of the NSI Act. This includes guidance on how the NSI Act can apply to outward direct investment and specific information for universities, helping academics to decide when to notify acquisitions to the ISU, including new examples.

The updated guidance has been compiled following extensive consultation with stakeholders through the NSI Act Call for Evidence that the Deputy Prime Minister launched in November 2023.

The NSI Act gives the UK government powers to scrutinise and intervene in business transactions, such as takeovers, to protect national security, while providing businesses and investors with the certainty and transparency they need to do business in the UK.

To date, the UK government has reviewed over 1,700 notifications and made 22 necessary and proportionate final orders under the Act to protect national security.

“We’re committed to protecting the UK’s national security while making sure we remain the best place in the world to invest,” Deputy Prime Minister, Oliver Dowden, said. “I’m publishing more guidance for businesses to give them a better understanding of the National Security and Investment Act (2021), fulfilling my commitment to use our national security powers in a precise and proportionate way.

“By being transparent with businesses, we’re creating a predictable foundation for future investment, which will help deliver on our plan to grow the economy.”

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