Tighter rules for foreign takeovers of firms with UK national security importance

The National Security and Investment (NSI) Act will allow the government to be able to scrutinise and intervene in certain acquisitions made by anyone, including businesses and investors, that could compromise the UK’s national security. The government will also be able to impose certain conditions on an acquisition or, if necessary, unwind or block it.

Despite the powers afforded by the Act, the Department for Business, Energy & Industrial Strategy said it expected that it would “rarely” have to use them and anticipated that the “vast majority” of deals will require no intervention.

Business secretary Kwasi Kwarteng said: “The UK is world-renowned as an attractive place to invest but we have always been clear that we will not hesitate to step in where necessary to protect our national security. The new investment screening process in place from today is simple and quick, giving investors and firms the certainty they need to do business, and giving everyone in the UK the peace of mind that their security remains our number one priority.”

Ministers will be able to unwind deals that have already taken place if false or misleading information was provided. It will be enacted retrospectively to any deals made since 12 November 2020 and has already been cited by the government over deals in the defence sector announced early last year.

The new regime requires businesses and investors to notify the government of certain acquisitions across 17 sensitive areas of the economy, including AI and civil nuclear. The government has published comprehensive guidance to help businesses and investors to understand their obligations under the new rules, including how to assess whether the government must be notified of an acquisition.

In November, the Competition and Markets Authority launched an investigation into the proposed acquisition of chip designers Arm Holdings by Nvidia on competition and national security grounds.