The National Security and Investment Bill was granted Royal Assent on 29 April 2021, becoming law as the National Security and Investment Act 2021.
The UK Government announced in a press release that the regime is expected to commence towards the end of this year. The Act received broad cross-party support in Parliament and is part of a global trend towards increased powers for States to review foreign investments on national security grounds. Business Secretary Kwasi Kwarteng said “nothing is more important than protecting our national security and this historic Act will ensure we are better equipped to protect our citizens from the small number of foreign investors that seek to do us harm“.
Ahead of this, the Government has stated plans to work closely with investors and businesses to help them understand what has changed, with special attention placed on sectors where mandatory notifications will be required (which includes a wide range of critical suppliers, key infrastructure, and developers of emerging technologies).
Despite passage of the Bill into law, very little will change until the new regime is brought into effect by secondary legislation. The provisions coming into effect immediately empower the government to introduce regulations (by statutory instrument) on different aspects of the Act. These regulations will provide the finer detail for specific aspects of the framework created by the Act, such as the range of acquisitions that will be subject to mandatory notification, what mandatory notices, validation applications and voluntary notices will look like, and offences and penalties. More detailed guidance and final definitions of mandatory sectors will also be provided in upcoming months, with the first batch of guidance expected in July.
Whilst the Act will ultimately repeal the “national security” ground for public interest intervention under the Enterprise Act 2002, this power will remain in place until the new regime commences.
Given the retrospective powers under the new National Security and Investment Act to call in acquisitions completed after 12 November 2020, parties to any deal falling within mandatory sectors of the new regime or with potential to otherwise give rise to national security concerns, may wish to consider voluntary engagement with the Government as a precaution to mitigate any deal risks or uncertainty. Such engagement is already taking place on current deals.