Global menu

Our global pages


Countdown to the UK National Security Screening Regime: Is your business prepared?

  • United Kingdom
  • Competition, EU and Trade - Foreign investment regimes


On 4 January 2022, the UK’s new National Security and Investment (“NSI”) screening regime will come into force. This will mean that a wide range of transactions completed since 12 November 2020 will be required to make a mandatory notification to the Investment Security Unit (“ISU”) and obtain clearance before the deal can close.  The new NSI screening regime will result in an increased regulatory burden for businesses and could impact their timelines.  Failure to abide by the new rules could also lead to significant penalties. 

On 15 November 2021, the UK Department for Business, Energy & Industrial Security (“BEIS”) published updated guidance on the NSI Act 2021 (“NSI Act”) screening regime (“Guidance”) providing further clarity for businesses on how the regime will operate in practice.  On 2 November 2021, BEIS also published the final statement on the Secretary of State’s “call-in” power.  In this briefing, we summarise the changes made to the Secretary of State’s call-in power since BEIS’ consultation and detail the procedure for submitting notifications under the NSI screening regime.

Which transactions are included under the NSI Act?

The NSI screening regime is broad and covers acquisitions made by anyone, including businesses and investors from any country, that could harm the UK’s national security.  Whether a transaction falls under the definition of a “qualifying acquisition” under the NSI Act will depend on whether it involves the acquisition of control over, or of a sufficiently material right/interest in a qualifying entity or asset, that is located in, or has a connection to, the UK.

A “qualifying entity” means any entity, whether a legal person or not (but not an individual), and includes a UK company, partnership, a trust and any other corporate body or such a company which carries on activities, or supplies goods/services to persons in, the UK (“Qualifying Entity”).

A “qualifying asset” includes land, tangible moveable property and any intellectual property situated in the UK or outside the UK if used in connection with activities carried on in the UK or the supply of goods/services to persons in the UK (“Qualifying Asset”).

An acquisition will be in scope where, as a result of the transaction, one (or more) of the following “trigger events” occurs:

  1. a person acquires more than 25%, 50%, and 75% of the voting rights or shares in a Qualifying Entity (each time one of these three thresholds is exceeded constitutes a new trigger event);
  2. a person acquires voting rights enabling it to secure or prevent the passage of any class of resolution governing the affairs of the Qualifying Entity;
  3. a person is able to materially influence the policy of the Qualifying Entity; or
  4. a person is able to use a Qualifying Asset, or direct or control its use (or even more so than they could before the transaction).

For the purpose of the first trigger event, the thresholds cover the following:

Type of Qualifying Entity

Threshold Description

Entity with a share capital

Holding shares comprised in the issued share capital of a nominal value (in aggregate) of that percentage of share capital

Entity without a share capital

Holding a right to that percentage share of the capital or profits of the Qualifying Entity

Limited Liability Partnership

Holding a right to that percentage share of any surplus assets of the partnership on its winding up.  Where this is not expressly provided for, each member will be treated as having an equal share

For the purpose of the second trigger event, voting rights means:

  • rights given to shareholders or members to vote at general meetings on all, or substantially all, matters relating to the Qualifying Entity;
  • if the Qualifying Entity does not have general meetings at which matters are decided by such votes, voting rights includes any rights in relation to that entity that are of equivalent effect; and
  • in the case of minority veto rights, the voting rights only count where they provide the holder with a right to vote on all or substantially all matters governing the affairs of the Qualifying Entity.

For the purpose of the third trigger event, “material influence” has the same meaning as under the UK merger control regime. This will be triggered where the acquirer(s) is able to materially influence the management of the Qualifying Entity’s business including its strategic direction, and its ability to define and achieve its commercial objectives.  For example, if the acquirer obtains the right to appoint boards members of the Qualifying Entity this would fall within the third trigger event, as this would enable the acquirer to influence the strategic direction of the Qualifying Entity. 

For the purpose of the fourth trigger event, the acquisition of a right or interest enabling the acquirer to use or direct/control the use of the asset is sufficient regardless of whether they acquire the asset itself. 

It is important to be aware that corporate restructurings or reorganisations are also covered under the NSI Act and can constitute a “qualifying acquisition” even if the acquisition takes place within the same corporate group. 

What interests and rights are included within the NSI Act?

The NSI Act covers the acquisition of rights and interests which are held in any of the following ways:

  • jointly with someone else;
  • under a joint arrangement with someone so that they will exercise all, or substantially all, of the rights/interests in a way pre-determined by the arrangement;
  • through a majority stake in an entity that holds the interest/right, or is part of a chain of entities which each hold majority stakes through the chain and the last one holds the interest/right;
  • through control of a right that is owned by another party (unless the owner also controls the right);
  • by holding a right exercisable only under certain circumstances, when the circumstances have arisen or the holder controls whether those circumstances exist. This excludes administrators or creditors, and  rights attached to shares which are held as security by a lender;
  • by holding combined rights or interests with another person by virtue of being connected (for example, a spouse, relative or two or more undertakings in one group); or
  • by holding rights or interests with another person who share a common purpose (for example, coordinating influence on an entity’s activities).

Notification process

The NSI screening regime will be administered by the ISU within BEIS with the Secretary of State as the decision-maker.

The Guidance sets out the procedure for notifying acquisitions to the ISU, following the adoption on 15 November 2021 of the NSI Act (Prescribed Form and Content of Notices and Validation Applications) Regulations 2021 and the NSI Act (Procedure for Service) Regulations 2021

Making a notification

From 4 January 2022, businesses will be able to notify acquisitions for NSI screening through the ISU’s online portal (which is currently under development) using one of the three types of forms:

  • a mandatory notification form for notifiable acquisitions in the 17 sensitive areas of the economy (Advanced Materials; Advanced Robotics; Artificial Intelligence; Civil Nuclear; Communications; Computing Hardware; Critical Suppliers to Government; Cryptographic Authentication; Data Infrastructure; Defence; Energy; Military and Dual-Use; Quantum Technologies; Satellite and Space Technologies; Suppliers to the Emergency Services; Synthetic Biology and Transport, as defined in the NSI Act (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021);
  • a voluntary notification form for qualifying acquisitions outside the scope of the mandatory regime; and
  • a retrospective validation application for notifiable acquisitions completed without notifying. Without such a validation, the acquisition will be void.

The information required for the three types of notices is broadly the same and includes information relating to the acquirer, the target and the acquisition; any notifications submitted to overseas investment screening regimes within the past 12 months and any UK regulatory approvals obtained in respect of the acquisition (e.g. merger clearance).  However, not all of the specified information will be required in each case and this will be reflected in the online portal.  No filing fees will apply.

BEIS will only accept a notification if it complies with the notification requirements and contains all of the required information. It is only once BEIS confirms by email that it has accepted the notification that the review period will commence. 

Timing of notifications

Mandatory notifications should be submitted before the acquisition of control.  Notifiable acquisitions which are completed without notifying and gaining approval will be void (unless a retrospective validation application is submitted and obtained). 

Voluntary notifications should be submitted from the point at which arrangements are in progress or contemplation and which, if completed, would result in the acquisition of a qualifying entity or asset.  

Review and assessment process

The notification will be subject to a review period, and may also be subject to an assessment period (if called-in), each lasting up to 30 working days.  The assessment period may be extended by an additional 45 working days (subject to certain conditions) or even longer (subject to the acquirer’s consent).  

Review Period

Assessment period

Within 30 working days of accepting the notification, BEIS will either:

  • clear the acquisition;
  • call-in the acquisition for a full national security assessment; or
  • request further information (through an ‘information notice’), or for relevant individuals to attend a meeting (through an ‘attendance notice’).

Within 30 working days of commencing the assessment period, BEIS will either:

  • clear the acquisition;
  • clear the acquisition with conditions;
  • block the acquisition; or
  • extend the assessment period by another 45 working days.

BEIS anticipates that most notifications will be cleared (rather than called-in) during the 30 working day review period.  Information or attendance notices issued during the review period will not “stop-the-clock”.

Interim orders may be made to prevent the exchange of confidential information or access to sensitive sites or assets and could include compliance monitoring requirements. 

Unlike during the review period, information and attendance notices issued during the assessment period will have the legal effect of “stopping-the-clock”.

BEIS must notify the relevant parties if it intends to issue a final order either to block an acquisition or clear it subject to conditions.  They will be given the opportunity to make representations. 


BEIS will not usually publicise that it has called-in an acquisition for national security assessment or that it has issued an interim order.  However, BEIS recognises that the parties may need to disclose this as part of their regulatory requirements (e.g. under the UK Market Abuse Regulation).  In such cases, individual guidance will be given. 

Compliance and enforcement

Parties whose transaction is subject to an NSI screening review should ensure that they do not breach their legal obligations by:

  • completing a notifiable acquisition without approval;
  • failing to comply with an interim or final order;
  • failing to comply with an information notice or attendance order; and/or
  • using or disclosing information in contravention of disclosure of information provisions.

Under the NSI Act and accompanying legislation, BEIS is able to issue/apply for various measures where breaches occur ranging from advice, guidance and warnings to civil injunctions, civil penalties (up to 5% of the party’s global group turnover or £10 million, whichever is greater, as well as daily penalties of up to £200,000) and criminal proceedings.

Call-in power

From 4 January 2022, the Secretary of State will be able to call-in both deals completed since 12 November 2020 and proposed transactions which it reasonably suspects are “qualifying acquisitions” that have given rise, or may give rise to, a UK national security risk.  BEIS can assess acquisitions up to 5 years after they have taken place and up to 6 months after becoming aware of them.

Following its consultation over the summer (see our previous briefing), on 15 November 2021, BEIS published its final guidance on its call-in power (“Call-in Guidance”).  Whilst this remains largely the same as the draft, some notable changes have been made.  The Call-in Guidance now clarifies that:

  • acquisitions of “material influence” (potentially below 15% shareholding) over targets active in the 17 sensitive areas of the economy are more likely to be called-in;
  • loans, conditional acquisitions, futures and options are unlikely to be called-in, as they are unlikely to pose a risk to UK national security;
  • a “potential for immediate or future harm to UK national security” includes risks to governmental and defence assets (infrastructure, technologies and capabilities) including:
    • disruption or erosion of military advantage;
    • the potential impact of a qualifying acquisition on the security of the UK’s critical infrastructure; and
    • the need to prevent actors with hostile intentions towards the UK building defence or technological capabilities which may present a national security threat to the UK;
  • the Secretary of State expects to call-in acquisitions where all three risk factors (target risk, acquirer risk and control risk) are present but will not rule out calling-in acquisitions on the basis of fewer risk factors;
  • State-owned entities, sovereign wealth funds or other entities affiliated with foreign states, are not inherently more likely to pose a national security risk;
  • the Secretary of State will not make judgements based solely on an acquirer’s country of origin, but an acquirer’s ties or allegiance to a state or organisation which is hostile to the UK will be considered when assessing whether their qualifying acquisition has given, or may give, rise to a risk to the UK’s national security;
  • the control risk will be assessed alongside the target and acquirer risk.  The Guidance states that if the target and/or acquirer risk is low, the level of control acquired is less likely to give rise to a risk to national security and is, therefore, less likely to be called-in;
  • the call-in power is more likely to be used for qualifying acquisitions of assets that are or could be used in connection with the activities in the 17 sensitive areas of the economy (or closely linked with these activities); and
  • land is mainly expected to be an asset of national security interest where it is, or is proximate to, a sensitive site e.g. critical national infrastructure sites or government buildings. The Secretary of State may, however, also take into account the intended use of the land.

The examples in the Call-in Guidance have also been updated to reflect the changes set out above.

It is important to note that the Secretary of State can call-in and assess a potential qualifying acquisition even if it has not yet taken place provided it reasonably suspects that it may cause a national security risk.  Whether a transaction is sufficiently in process or contemplation for the Secretary of State to issue a call-in notice will depend on the facts of that deal.  However, the Guidance states that agreeing and signing heads of terms could be sufficient.  


We welcome the further guidance provided by the UK Government to offer clarity on how the new NSI regime will operate in practice.  Given the broad nature of the regime, businesses should factor-in the possibility that, from 4 January 2022, their deals could be delayed by at least 30 working days if they fall within the scope of the NSI regime.

We also welcome the changes made in the Call-in Guidance.  Although the Secretary of State’s call-in power remains broad, it contains important clarifications particularly on how the three risk factors will be applied.   

To stay up-to-date with the latest global foreign investment and national security updates, and for further resources, visit our Foreign Investment hub.