On 18 April 2024, the UK Government published its response to the call for evidence that it launched in December 2023 asking for stakeholder feedback on a number of areas of potential change to the UK’s National Security and Investment Act (“NSI Act“).

The call for evidence, launched nearly two years after the UK’s first, standalone foreign investment review regime came into force (see here), sought views on a broad range of questions concerning both the scope and process of the NSI Act. It signaled an intent from the UK Government to make the existing regime more pragmatic for market participants whilst maintaining the government’s stated position of having a “small garden, high fence approach” when it comes to scrutinizing investment into the UK.

The UK Government stated that it had received 110 full responses to its call for evidence and noted that the overall feedback regarding the operation of the system had been “positive”. In response to the feedback received, the Government has announced a series of actions and further consultations – set out below – that it will undertake between now and Autumn 2024 (subject to parliamentary time).

Publishing an updated statement on how the Secretary of State expects to exercise its call-in power

The Government will publish an updated Section 3 Statement on how the Secretary of State expects to exercise its call-in power. Under the provisions of the NSI Act, the Secretary of State has the power to proactively investigate (i.e., “call-in”) a transaction if it reasonably suspects the acquisition has “given, or may give, rise to a risk to national security“.

Whilst this criterion is undefined under the NSI Act legislation – and has been broadly interpreted by the UK Government – the existing Section 3 Statement (see here) sets out a number of factors that the Secretary of State will take into account when deciding whether to exercise its call-in power including: (i) the risk profile of the target; (ii) the risk profile of the acquirer; and (iii) the degree of control that will be acquired through the transaction.

Respondents to the consultation requested more clarity on the areas of the economy that the Government considers most sensitive and on how the Government assesses the national security risks of a transaction. In response, the Government has confirmed that it will be publishing further guidance and updating the Section 3 Statement in May 2024 to help businesses to “better understand” the types of deals where the Government may intervene and why.

The Government has ruled out introducing a fast track process for notifications made by certain types of acquirer (e.g. those who have already had a prior transaction cleared through the NSI Act).  

Publishing updated market guidance

The Government noted a number of areas where a significant number of respondents requested specific guidance in relation to the application of the NSI Act. These include: (i) how the Act applies to transactions in academia and research areas; (ii) how statutory time limits are captured; and (iii) the scenarios where the NSI Act can apply to Outward Direct Investment.

In response to this feedback, the Government has announced that it will also be publishing further market guidance in May 2024 addressing the aforementioned topics. The market guidance published by the Government to date in relation to the NSI Act can be found here.

Consulting on changes to the mandatory notification areas

A majority of the respondents (63%) provided feedback on potential changes to the scope of the 17 specified areas of the economy (the “Mandatory Notification Sectors“) that are subject to the NSI Act’s mandatory notification regime (see the full list here). Respondents requested clearer definitions on the scope of a majority (9 out 17) of the Mandatory Notification Sectors including: Artificial Intelligence, Advanced Materials, Critical Suppliers to Government, and Defence.

In response to this feedback, the Government will launch a formal public consultation on updating the Mandatory Sector Definitions by the summer of 2024. This will include proposals for a standalone Semiconductor  area and a Critical Minerals area (both of which are currently covered by the “Advanced Materials” sector). The Government is also exploring the possibility of adding Water to the areas of the economy subject to a mandatory notification requirement.

Considering certain technical exemptions (including internal reorganisations) to the mandatory notification regime

The Government has acknowledged the feedback received from market participants that there should be targeted exemptions from the mandatory notification regime for certain types of transaction that tend to confer either minimal levels of control or no additional control (including internal reorganisations). In particular:

  • 25% of all respondents supported an exemption for the appointment of liquidators, official receivers and special administrators from the NSI Act’s mandatory notification system.
  • 27% of all respondents provided feedback on possible exemptions for certain internal company reorganisations.
  • 15% of all respondents provided feedback on exempting transactions involving Scots law share pledges.
  • 30% of all respondents provided suggestions on exemptions for public bodies. 

In response, the Government will bring forward secondary legislation to exempt the appointment of liquidators, official receivers and special administrators.

The Government is also considering whether to implement exemptions for certain internal reorganisations, Scots law share pledges and public bodies – however, before deciding to do so, it will undergo a feasibility assessment to better understand whether such exemptions can be designed in a way that does not “compromise the integrity of the NSI Act”.

The Government notes that the implementation of any such exemption will likely be achieved through legislation to be introduced in Autumn 2024 (subject to the UK parliamentary timetable).

Improving the operation of the NSI Act system (including the online notification service)

The Government has also acknowledged the feedback received for improvements that can be made to the notification process itself, with 19% of respondents seeking greater transparency and engagement from the Investment Security Unit (the “ISU”) during the course of substantive reviews. The Government has noted it will consider further such improvements to the notification process based on the feedback received although it has ruled out making any further changes to the notification form itself for the time being.

Respondents also flagged some of the technical issues encountered with the Government’s online notification portal, in particular the issue of a “firewall” block that prevents users from entering certain text within the online form. The ISU has stated it is aware of this issue and will continue to make improvements to the notification system.


Overall, the UK Government considers that the NSI Act is working well but intends to ensure that its foreign investment review regime anticipates future national security risks in a proportionate way, that both encourages investment and also allows for more agile scrutiny of sensitive transactions. We will monitor developments from the UK Government and post further blog with updates.


Samantha Mobley is a partner in the Competition, Trade and Foreign Investment department of Baker & McKenzie’s London office. She headed Baker McKenzie’s Global Antitrust and Competition Group, a team of over 300 competition and antitrust specialists worldwide for six years and is currently a leader in our Global Foreign Investment Practice. Samantha has significant experience of advising on complex multi-jurisdictional mergers and has a strong understanding of the importance of working effectively and strategically with global regulators. In addition to antitrust and merger control, she advises on the implications of foreign direct investment rules for cross-border transactions. On foreign investment matters, she works closely with our Tier 1 trade team, given their export control national security expertise. Samantha is ranked as an Eminent Practitioner for competition law, Chambers & Partners 2023.


Tristan Grimmer is a partner in Baker McKenzie’s London office and the UK Head of the International Trade Practice Group. He is also a member of the Compliance & Investigations and the International Trade and Competition practice groups. Tristan advises clients on the management and mitigation of a range of international trade compliance risks, notably in the areas of sanctions and export controls. Tristan is also highly experienced in advising on the implications of the UK foreign direct investment rules for cross-border transactions and has closely followed the UK Government’s development of their foreign investment regime. He has advises clients across industries handling a wide range of trade law issues in transactional, commercial and compliance contexts, and on regulatory investigations and strategy in front of national and supra-national authorities. Tristan is named as a "Leading Individual" for EU And Competition: Trade, WTO Anti-Dumping and Customs in the UK Legal 500 2023 directory.


Zeyang Gao is an associate in Baker McKenzie's Competition, Trade and Foreign Investment Department in London. Zeyang advises on all aspects of competition law including merger control, foreign investment and national security reviews, competition investigations, state aid, information exchange, abuse of dominance and general competition compliance. Zeyang is experienced in advising on high value and complex multi-jurisdictional transactions, and advises and represents clients in the tech, telecoms and healthcare industries. He has also represented clients on a broad range of matters before the UK Competition and Markets Authority, the European Commission, and the UK Investment Security Unit.


Emily Thomson is an associate at the Firm's London office and is a member of the International Commercial & Trade and Antitrust & Competition practice groups. Emily advises clients on foreign direct investment, sanctions, export controls, trade compliance and customs. She has extensive experience advising clients on the application of the UK national security and foreign direct investment regime, from assessing whether the regime applies to clients and making notifications to the UK Government on their behalf, to assisting clients with advocacy on points of national security in front of UK Government. Emily also has a particular focus on advising clients on the ever-changing landscape of EU and UK sanctions against Russia and other jurisdictions.