Proposed modifications to the purview of the National Security and Investment Act by the UK government
Streamlining the National Security and Investment Act: Focus on Key Sectors and Acquisitions
The UK government has announced proposed changes to the National Security and Investment Act (NSIA) aimed at streamlining and refining the sectors and types of acquisitions subject to mandatory notification and scrutiny. These reforms aim to reduce burdens on businesses while maintaining national security protections.
One of the key proposed changes is the removal of mandatory notification requirements for certain internal reorganisations and the appointment of insolvency practitioners such as liquidators, special administrators, and official receivers. These types of transactions have rarely presented national security risks, so this change aims to reduce unnecessary regulatory burdens and allow the government to focus on higher-risk deals.
Another significant change is the launch of a consultation to update the Notifiable Acquisition Regulations (NARs), which define the sectors where acquisitions must be notified and are subject to government scrutiny. This aims to streamline the scope of activities in each sensitive sector and refine the regime based on feedback from a prior statutory review.
The government also proposes creating standalone sensitive sectors for semiconductors and critical minerals, reflecting their growing strategic importance. Additionally, there is consideration to add water as a new sensitive sector, recognizing its critical national security role.
The consultation seeks opinions on changes to the NAR, including updates to sectors such as Critical Minerals, Semiconductors, Advanced Materials, Artificial Intelligence, Communications, Critical Suppliers to Government, Data Infrastructure, Energy, Suppliers to the Emergency Services, and Synthetic Biology.
The ISU received a total of 1,143 notifications during the last financial year, an increase of over 25% compared to the previous year. Of these, 954 were mandatory notifications, 134 were voluntary notifications, and 55 were retrospective validation applications.
The Critical Suppliers to Government sector is being tightened up to relate only to contracts with specified ministerial departments. A new area requiring mandatory notification, Water, is being introduced, applying to companies with statutory powers and duties to supply water or sewerage services.
The review process resulted in 95.5% of notifications leading to no further action and 4.5% being called in. The largest proportion of final orders was associated with acquisitions in the Defence area of the economy (37%). The largest number of final orders involved acquirers associated with the United Kingdom (11 final orders).
The changes to exclude intra-group reorganisations and certain insolvency appointments from the rules will come into effect by the end of 2025 or early in 2026, depending on the level of feedback to the current consultation. The government has opened a consultation on proposed amendments to the NSIA, running until 14 October 2025.
The NSIA investment security rules will be simplified, with conditions for approved acquisitions possibly including corporate governance requirements, data management, procurement restrictions, and business location restrictions. The public consultation on these sector and acquisition changes is open for 12 weeks starting July 2025.
[1] GOV.UK. (2025). National Security and Investment Act: consultation on proposed reforms. [online] Available at: https://www.gov.uk/government/consultations/national-security-and-investment-act-consultation-on-proposed-reforms
[2] GOV.UK. (2025). National Security and Investment Act: Annual report 2024-2025. [online] Available at: https://www.gov.uk/government/publications/national-security-and-investment-act-annual-report-2024-2025
[3] GOV.UK. (2025). National Security and Investment Act: guidance on notifiable acquisitions. [online] Available at: https://www.gov.uk/guidance/national-security-and-investment-act-guidance-on-notifiable-acquisitions
[4] GOV.UK. (2025). National Security and Investment Act: guidance on the call-in power. [online] Available at: https://www.gov.uk/guidance/national-security-and-investment-act-guidance-on-the-call-in-power
- The proposed reforms to the National Security and Investment Act (NSIA) aim to refine the intellectual property aspects of acquisitions, ensuring a balance between business interests and policy-and-legislation related to antitrust and intellectual property rights.
- In the consultation on proposed amendments to the NSIA, the government has sought opinions on changes to sectors that encompass finance and general news, such as artificial intelligence, data infrastructure, and communications, with the aim of understanding their potential impact on national security.
- The changes to the National Security and Investment Act could lead to new restrictions in specific sectors like energy, synthetic biology, and defense, which may impact the overall business environment and politics, given their importance in the broader economy.
