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.