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April 4, 2022
On 4 January 2021, with the commencement of the National Security and Investment Act 2021 (Commencement No 2 and Transitional and Saving Provision) Regulations 2021, the National Security and Investment Act 2021 (NSI Act) came fully into force.
The NSI Act gives the Government power to scrutinise and intervene in certain acquisitions made by anyone, including businesses and investors, that could harm the UK’s national security. The Government can also impose certain conditions on an acquisition or, if necessary, unwind or block it, although the Government says that it expects this to happen only rarely, and most deals will require no intervention and be able to proceed without delay. The NSI Act also gives investors additional certainty and clarity, with more transparency and more simple, efficient clearance processes for relevant acquisitions.
The NSI Act 2021 provides that in certain circumstances persons can or must notify the Secretary of State of relevant acquisitions and that the Secretary of State may make regulations to prescribe the form and content of those notifications.
According to the Explanatory Memorandum, notifications enable the Secretary of State to assess acquisitions and decide whether to intervene where risks to national security are identified in order to mitigate those risks. There are three types of notification that may be required:
- mandatory notice: acquirers must notify the Secretary of State of notifiable acquisitions prior to completion, as set out by Regulations made under powers in s 6 of the NSI Act 2021;
- application for retrospective validation of a notifiable acquisition: where a notifiable acquisition is void as a result of an acquirer failing to notify and receive clearance for that acquisition, any person materially affected by this can apply for that acquisition to be retrospectively validated; and
- voluntary notice: parties can voluntarily notify the Secretary of State of an acquisition that is not a notifiable acquisition.
These new National Security and Investment Act 2021 (Prescribed Form and Content of Notices and Validation Applications) (Amendment) Regulations 2022 amend the National Security and Investment Act 2021 (Prescribed Form and Content of Notices and Validation Applications) Regulations 2021 laid before Parliament on 16 November 2021 in order to correct the inconsistent use of the term “national infrastructure sector”. Without this new corrective instrument, the existing regulations may be unclear to external parties who are legally obligated to notify using these forms. To access the corrective legislation, click here.