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UK Government removes 15% threshold for mandatory notification under NS&I Bill regime

As flagged in our previous blog post accessible here, the UK Government has now confirmed, at the House of Lords Report Stage on 15 April, the removal of the 15% threshold for mandatory notification under the National Security and Investment Bill (“NS&I Bill“) regime. This is the first significant amendment to the draft regime in the UK Parliamentary process, and will reduce materially the scope of transactions subject to notification requirements. The threshold for mandatory notification in the 17 sensitive sectors will now be over 25% of shares or voting rights (these sector areas are expected to be finalised in secondary legislation in the next few weeks). Importantly, the UK Government will still be able to call in for review transactions falling below this 25% threshold where material influence is present, meaning voluntary notification may be advisable for some cases even outside the mandatory thresholds. 

At the Report Stage, certain amendments were also made to the UK Government’s annual reporting obligations under the NS&I Bill, reflecting concerns around transparency of the regime raised by many UK parliamentarians. For example, annual reports must now provide details of the average number of working days from mandatory notification to a decision to accept or reject such notification, and summaries of final orders and national security risk assessments (unless the UK Government considers that such publication would be contrary to the interests of national security).

The NS&I Bill’s Third Reading is scheduled for 22 April 2021. We currently expect the regime to become operational in Autumn 2021, upon the passing of relevant secondary and implementing legislation.

For further background and information on the NS&I Bill regime, please see our initial blog post accessible here. Stay tuned to Baker McKenzie’s Foreign Investment and National Security Blog for future developments, and don’t hesitate to reach out to the BM London team via the below details if you would like further support regarding the regime’s impact on your transactions.

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Sunny Mann is a Partner and leads the EMEA and UK International Trade team, ranked Tier 1 by Legal 500. His practice includes a focus on national security, foreign investment, export controls and trade sanctions matters. He has worked on a number of foreign investment review cases, including obtaining clearance for a high profile acquisition triggering potential defence and national security concerns, one of the very few cases to go through a full UK statutory review. In the Legal 500, Sunny is ranked as a "Leading Practitioner".

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Samantha Mobley is a partner in the EU, Competition & Trade Practice of Baker & McKenzie’s London office and a member of the London office Management Committee. She headed Baker McKenzie’s Global Antitrust and Competition Group, a team of over 300 competition and antitrust specialists worldwide for six years. Samantha has significant experience of advising on the implications of foreign direct investment rules for cross-border transactions. She has advised a number of companies on the implication of the reduced UK national security thresholds, as well as coordinating the global foreign investment review aspects of a proposed $12 billion joint venture between a FTSE100 company and a Fortune 500 corporate. Samantha is a Who’s Who Legal 2020 Leading Individual for Foreign Investment Review.

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Alexander is an Associate in Baker McKenzie’s London office in the EU, Competition & Trade Practice. He has experience advising private equity and industry clients on foreign investment rules in a range of sectors (including consumer goods, media and technology).

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