The National Security and Investment Act 2021 (‘the NSI Act’) commenced on 4 January 2022 and gives the government powers to assess and intervene in investments and other acquisitions of control that may give rise to national security risks. These Market Guidance Notes complement the guidance already published on the NSI Act by answering questions and providing advice based on the first 6 months of the NSI Act’s operation.

Find out more about how the NSI Act works.

This guidance covers:

Notifications

  • avoiding common errors on notifications
  • submitting a single notification for multiple acquisitions
  • help for higher education institutions to decide whether to notify

Temporary acquisitions of control

  • the appointment of liquidators or other insolvency measures
  • whether certain types of acquisitions may be qualifying acquisitions under the NSI Act
  • the granting of security over shares
  • indirect acquisitions of control
  • different types of voting rights and mandatory notification
  • internal corporate reorganisations

How and when the government will publish information related to the NSI Act

  • review of the operation of the NSI Act processes

The topics in this guidance are based on analysis of the notifications received under the NSI Act and feedback from stakeholders on their experience of the system. Most interest has been focused on the mandatory notification system and so this first set of market guidance notes has a particular focus on whether commonly raised scenarios require mandatory notification.

We welcome suggestions for topics to include in future market guidance publications: send suggestions to [email protected] We will publish another tranche of Market Guidance Notes in early 2023.

This guidance is published in addition to the other guidance documents available on GOV.UK and does not supersede them. Please also refer to the Section 3 Statement for information about how the Secretary of State expects to use the call-in power.

Notifications

Avoiding common errors in notification forms

This section provides practical advice to help when filling out NSI Act notification forms, based on some common inconsistencies in forms that the government has received. Filling in the forms correctly will help to ensure that acquisitions can be assessed without delay.

This section begins with some top tips that notifiers should have in mind when filling in the forms. It then contains some additional advice on the details of the forms.

Top tips

Before submitting a notification for review by the Investment Security Unit (ISU), notifiers should:

  • make sure they have read the GOV.UK guidance
  • ensure they have structured their responses clearly
  • ensure they have proof-read the notification and that all relevant information has been included
  • ensure they have included the appropriate declarations and have signed them correctly
  • ensure they have selected the correct economic areas under the NSI Act by consulting the mandatory notification requirements

Further assistance on what to provide when answering questions on the notification forms

This section explains how to answer certain questions in the notification forms and gives examples of good responses.

Explaining which sectors are relevant to a notification

The question of which sector or sectors are relevant to a notification appears in both voluntary and mandatory notification forms and is designed to give space for the notifier to explain the activities that are undertaken by the qualifying entity, or by using the asset, that put the acquisition in scope of the NSI Act.

When answering this question, notifiers should select the relevant sector(s) by ticking the relevant boxes. In the ‘Additional information’ section they should describe the activities of the qualifying entity or entities, or the use of the asset or assets, within those sectors and, when completing a mandatory notification form, make specific reference to the relevant Schedules in the Notifiable Acquisition Regulations [footnote 1]. Answers should provide as much detail as possible about the activities of the qualifying entity or asset, should be explained clearly, and should avoid the use of technical language.

As an example, an incomplete response might simply state the following:

The activities of Company A fall within the ‘Artificial Intelligence’ and ‘Critical Suppliers to Government’ sectors.

This is not a sufficient answer, as it does not allow the Secretary of State to verify quickly which of the entity’s activities fall within the specified descriptions and why.

A better answer provides more information and explains which of the qualifying entity’s activities are within scope of the NSI Act. For example:

Company A develops software that uses artificial intelligence for the purpose of object identification in the context of their customers’ activities in geographical mapping, planning, and transportation.

Company A also provides IT consultancy services to clients who are government entities as defined in paragraph 1 of Schedule 7 of the National Security and Investment Act 2021 (Notifiable Acquisition), (Specification of Qualifying Entities) Regulations 2021 (the “Regulations”) under contracts which require employees of Company A to be vetted at ‘Security Check’ level and may involve the processing of material to which a security classification of SECRET has been applied.

Company A also provides IT consultancy services to public sector authorities as defined in paragraph 2 of Schedule 9 of the Regulations, where the provision of such services gives Company A administrative access to relevant data infrastructure.

Another example could be:

Company X (the “Qualifying Entity”) carries on activities in Energy.

Certain of the Qualifying Entity’s interests fall within the scope of Schedule 11, Regulation (3)(a)(i) and (f)(i) of the National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021. The Qualifying Entity has ownership interests in existing upstream petroleum facilities, which meet the thresholds set out in Schedule 11, Regulation 4(2). The assets that will have a throughput of greater than 3,000,000 tonnes of oil equivalent over the 12 calendar months preceding the month in which the Acquirer gains control are as follows: Name of facility: Facility A.

The Qualifying Entity has ownership interests in onshore gas processing facilities, which meet the thresholds set out in Schedule 11 Regulation 4(8). The assets that have the technological capacity to carry on gas processing operations in relation to greater than 6 million cubic metres of gas per day are as follows: Name of facility: Facility B.

When submitting a voluntary notification, the notifier should provide as much information as possible to explain the activities of the qualifying entity or how the asset in question is used, and why they have chosen to submit a voluntary notification.

Explaining which qualifying acquisitions (“trigger events”) apply to the acquisition

When submitting notification forms, notifiers are asked to select the “trigger events” (referred to as “qualifying acquisitions” in this guidance) that apply to the acquisition. Alongside this, it is good practice for the notifier to include a description of the acquisition, providing details of the shareholding and/or other rights being acquired. Doing so will aid the review of the notification.

Some acquisitions will be particularly complex, but notifiers should provide as much detail as possible to describe the qualifying acquisition clearly and, if applicable, set it in the context of any wider acquisition.

As an example, an incomplete answer might simply state the following:

This acquisition involves a purchase of shares in Company B by Company A.

This is not a sufficient answer as it does not provide the government with enough information regarding the qualifying acquisition (e.g. the exact percentage of shareholding being acquired). This may result in a slower decision-making process.

An answer that provides more information and explains the details of the acquisition could be:

The percentage of the share that the person holds in the entity meets the relevant control thresholds

Company A intends to acquire the entire issued share capital of Company B. Company A will acquire 100 ordinary shares of £1 each in the capital of Company B, together with all rights attaching to those shares. These provide full rights to share in all dividends or capital distributions made and full votes (1 per share) to vote on matters at a general meeting of Company B. Accordingly, the acquisition will take Company A’s shareholding from zero to more than 75%, which is a trigger event under the National Security and Investment Act 2021.

Completion of the acquisition will be conditional upon the Secretary of State for Business, Energy & Industrial Strategy confirming that the acquisition is approved under the National Security and Investment Act 2021.

The percentage of the voting rights that the person holds in the entity meets the relevant control thresholds

Company A intends to acquire all the voting rights in Company B. Accordingly, the acquisition will take Company A’s voting rights in Company B from zero to more than 75%, which is a trigger event under the National Security and Investment Act 2021.

The acquisition of voting rights in the qualifying entity, whether alone or together with other voting rights held, will enable the acquirer to secure or prevent the passage of any class of resolution governing the affairs of the entity

Company A intends to acquire all the voting rights in Company B. Accordingly, Company A will have the ability to pass any class of resolution governing the affairs of Company B, which is a trigger event under the National Security and Investment Act 2021.

Another example could be:

The percentage of the share that the person holds in the entity meets the relevant control thresholds

The entity being acquired is Company B. The acquisition will be made by Company A through its direct, wholly owned subsidiary Company A Sub. Company A Sub was a recently incorporated entity formed for the purpose of the acquisition. Company A Sub does not have any business activities. Company A Sub will merge with and into Company B, with Company B surviving as a wholly owned subsidiary of Company A.

Company A would acquire 100% of the shareholding rights of Company B. The threshold in section 8(2) of the National Security and Investment Act 2021 (the “Act”) would therefore be met.

The percentage of the voting rights that the person holds in the entity meets the relevant control thresholds

Company A Sub will merge with and into Company B, with Company B surviving as a wholly owned subsidiary of Company A. Company A would acquire 100% of the voting rights of Company B. The threshold in section 8(5) of the Act would therefore be met.

The acquisition of voting rights in the qualifying entity, whether alone or together with other voting rights held, will enable the acquirer to secure or prevent the passage of any class of resolution governing the affairs of the entity

Company A Sub will merge with and into Company B, with Company B surviving as a wholly owned subsidiary of Company A. Company A would acquire 100% of the voting rights of Company B. This will enable Company A to secure or prevent the passage of any class of resolution governing the affairs of Company B. The threshold in section 8(6) of the Act would therefore be met.

Structure charts

The notification forms ask for structure charts to be provided. These are an important part of the notification and are needed to understand fully the ownership structure of entities and assets before and after the acquisition has been completed. This information is important because, as set out in the Section 3 Statement, the government will consider the ultimate controller of the acquirer when deciding whether to use the call-in power. Without this information a notification may be rejected as there might not be enough information for the government to decide whether to call in or clear the acquisition.

Structure charts should be in a chart format and include the ultimate beneficial ownership of both the qualifying entity and the acquirer, the nationalities (for named individuals), the country of incorporation (for entities), any subsidiaries and the percentages of ownership between entities.

The declarations

The declarations that accompany a notification must be completed correctly and included when submitting a notification. If they are not, then the notification is unlikely to be accepted.

Declarations A and B serve different purposes from each other.

If the party completing the form is submitting the notification directly as the notifying party, then they only need to complete Declaration A, which acknowledges that the notification is being knowingly and willingly submitted.

If the party completing the form is submitting the notification as a representative of the notifying party (e.g. as their lawyer) then they need to submit both declarations:

  • they must ensure that the notifying party signs Declaration A
  • they, as the notifying party’s representative, must sign Declaration B, which acknowledges that they are willingly and knowingly submitting a notification on behalf of the notifying party

Submitting a single notification for multiple acquisitions

This section covers instances where the government will and will not accept a single notification for acquisitions of control over multiple qualifying entities and/or assets.

In some scenarios where the government will accept one notification for multiple acquisitions, some of the acquisitions will require mandatory notification and others would not be required to be notified but could be notified voluntarily. If this is the case, the notifier should complete a mandatory notification form and then include details about the acquisitions they are voluntarily choosing to notify in the same notification.

The acquisition of multiple qualifying entities or assets from the same seller to a single acquirer

Where a qualifying acquisition involves multiple qualifying entities or assets being acquired by a single acquirer from a single seller (referred to here as the ‘parent’), this can be notified to the government as one notification and it will be addressed under one reference number.

Example 1

Company A is the parent for Companies X, Y, and Z. Company B acquires 76% of shares and voting rights in Companies X, Y, and Z at the same time, having previously held no shares or voting rights of any of these companies. This is a qualifying acquisition because Company B’s holdings will increase from below 75% to 75% or more. This can be notified as one notification because Company B is acquiring Companies X, Y, and Z from a single seller at the same time.

Example 2

Company A is the parent for Companies X, Y and Z. Company B acquires 28% of shares and voting rights in Company X; 53% of shares and voting rights in Company Y; and 100% of shares and voting rights in Company Y, all at the same time. These are qualifying acquisitions. These can be notified in the same notification form because Company B is acquiring control in Companies X, Y, and Z from the same seller at the same time.

The internal restructuring of an entity where there is no overall change in ultimate ownership

When a qualifying acquisition involves the internal restructuring of an entity or corporate group which contains multiple qualifying entities or assets, and there are no new shareholders from outside the corporate group acquiring control of shares or voting rights, this can be notified to the Government as one notification and it will be addressed under one reference number.

Example 1

Company A is the parent company for 20 subsidiaries. As part of a corporate restructure, Company A has created a new company, Company C, to be inserted into their internal structure under Company A, with Company A remaining the ultimate beneficial owner. An internal restructure of this type can be notified as one notification and will be addressed under one reference number, even though it deals with a change in control over 20 different subsidiaries.

Example 2

Company A is the parent company for 50 subsidiaries. As part of a corporate restructure, Company A has created two new companies, Company B and Company C, to be inserted into their internal structure. Company A is also selling two subsidiary companies to an acquirer outside of the Company A’s corporate group.. These must be submitted as two notifications: one for the corporate restructure involving Companies B and C, and one for the sell-off of Company A’s two subsidiaries.

The acquisition of multiple qualifying entities or assets involving the same acquirer/s but different sellers/parents

Where control of multiple qualifying entities or assets is being acquired from different sellers, they must be notified under separate notifications and will be addressed under separate reference numbers.

Example

Company A is the parent for Company X and Company B is the parent for Company Z. A new company acquires both Company X and Company Z. As both the qualifying entities have different sellers, these must be submitted under separate notifications.

Help for higher education institutions to decide whether to notify

Certain activities within higher education may fall within the scope of the NSI Act, as explained in the existing guidance for higher education and research intensive sectors.

The government has created a dedicated team, the Research Collaboration Advice Team (RCAT) to help ensure researchers’ work is protected, and that the UK research sector remains open and secure. This includes increasing understanding among academics of the laws and regulations they need to follow as they work internationally.

Researchers or higher education institutions who believe their work may be of relevance to the NSI Act and would like further advice can contact their assigned RCAT pointed of contact in advance of, or alongside, contacting the Investment Security Unit. If you do not already have an assigned point of contact, you should contact the Investment Security Unit on [email protected] Read further information about the RCAT.

Temporary acquisitions of control

The appointment of liquidators or other insolvency measures

The appointment of liquidators and receivers may constitute a qualifying acquisition under the NSI Act and, in some specific scenarios, may require mandatory notification.

Schedule 1 to the NSI Act does not treat rights that are exercisable by an administrator or by creditors while an entity is in relevant insolvency proceedings as being held by the administrator or creditors. This approach does not, however, include rights held by liquidators or receivers, who may oversee the winding up of an entity or the enforcement of secured assets – an action that could, in certain situations, raise national security risks.

This means the appointment of a liquidator or receiver may be a qualifying acquisition, and in specific cases may require mandatory notification. This will depend on whether and how the circumstances of the appointment meet the requirements of the NSI Act.

There are 2 scenarios, set out below, where the appointment of a liquidator or a receiver may result in them holding a right or interest in another entity. Their appointment may then require mandatory notification if the notifiable acquisition criteria are met.

Scenario 1

The liquidated entity has shares in a solvent entity. During the insolvency process, and prior to these shares being sold, the liquidator or receiver has voting rights over these shares. This is an acquisition of control and, if relevant tests are met – including if the solvent entity carries on activities specified in the notifiable acquisition regulations – could require mandatory notification.

Scenario 2

An individual, such as a director, is declared bankrupt and holds shares in a solvent entity. These shares are transferred over to the trustee in bankruptcy during the insolvency process. This is an acquisition of control and, if relevant tests are met – including if the solvent entity carries on activities specified in the notifiable acquisition regulations – could require mandatory notification.

When these scenarios occur and parties need to submit a mandatory notification, such notifications are subject to the same timelines as other notifications.

Whether certain types of acquisitions are qualifying acquisitions

The granting of security over shares

The granting of share security occurs where a person who owns shares in a qualifying entity (the borrower) grants security over those shares in favour of another person (the lender or a security trustee on behalf of a number of lenders). It is typical for the lender and borrower to agree that if a certain event takes place (for example, a default on the loan), the lender or security trustee will be able to enforce the share security and gain control over the share, allowing them to exercise voting rights in respect of the shares. The granting of share security is separate from the enforcement of that share security, which may or may not occur at a further point in time.

The granting of types of share security where title to the shares is not transferred to the secured lender (or its nominee) is not a notifiable acquisition requiring mandatory notification, even if it involves an entity carrying on activities covered in the Notifiable Acquisition Regulations.

The NSI Act concerns relevant acquisitions of control. Sections 8(2), 8(5), and 8(6) set out some of the ways that an acquirer might acquire control over an entity. If an acquirer gains control, under those sections, over an entity carrying on particularly sensitive activities set out in the Notifiable Acquisition Regulations, that will require mandatory notification and clearance before the acquisition can be completed. These sections set out the following ways to gain control:

  • the acquirer’s shareholding stake or voting rights in a qualifying entity meets or crosses certain percentage thresholds – for example, it becomes higher than 25%
  • the acquirer acquires voting rights in a qualifying entity that allows them to pass or block resolutions governing the affairs of the entity

However, the granting of such share security does not constitute any of these types of acquisitions of control.

Whilst the grant of a security over shares could create an equitable interest in such shares, such an interest would not appear to grant any control over the shares, as referred to in section 8(1) of the NSI Act, until the happening of an event that would provide control.

Section 8(2) of the Act should be read in conjunction with section 8(1) and (3) of the NSI Act. Section 8(1) provides that a person gains control of a qualifying entity if the person acquires a right or interest in, or in relation to, the entity and as a result one of the cases of control set out in section 8 arises.

The case set out in section 8(2) relates to an increase in the shareholding of the person and section 8(3) expands on the reference to “holding a percentage share” in section 8(2). The holding of shares in this context is a reference to having shares in a company. Whilst the grant of a security over shares could create an equitable interest in such shares, such an interest would not appear to grant any control over such shares, as referred to in section 8(1), unless or until an event that would provide control happens. The creation of a share pledge over shares in a qualifying entity of a specified description under Scots law, where title to the shares is transferred to the secured lender or its nominee, would require prior notification and clearance from the government.

Similarly, the case set out in section 8(5) relates to an increase in voting rights that the person holds in the entity. Such an increase in voting rights would also not appear until the event that would provide control happens.

This means it is not mandatory to notify and receive clearance from the government before granting equitable share security.

Notwithstanding the above, if legal title is transferred or control passes in some other way, and the shares qualify under the Notifiable Acquisition Regulations, a notifiable acquisition has taken place and must be notified to the Secretary of State before completion.

Indirect acquisitions of control

Under the NSI Act, it is possible for investors and other parties to acquire control over qualifying entities indirectly. This happens when there is an unbroken chain of majority stakes down to an entity of interest.

Schedule 1 in the NSI Act defines 4 types of majority stakes:

a) Company A holds a majority of voting rights in Company B; or
b) Company A is a member of Company B and has the right to appoint or remove a majority of the board of directors of B; or
c) Company A is a member of Company B and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in Company B; or
d) Company A has the right to exercise, or actually exercises, dominant influence or control over Company B.

Example 1

Company A acquires 51% of the shares in Company B, which in turn already holds 51% of the shares of Company C.

Company A has not only acquired direct control over Company B, but it has also acquired indirect control over Company C, and the rules in the NSI Act apply as if Company A was acquiring shares directly in Company C. This means that, assuming the other relevant tests in the NSI Act were met, Company A has made two qualifying acquisitions – the direct acquisition of Company B and the indirect acquisition of Company C.

If, instead, Company A had not acquired a majority stake in Company B (and none of (b) – (d) above were satisfied), or Company B did not have control (within section 8(1)) over Company C, Company A would not have acquired indirect control over Company C.

Example 2

Company A acquires 51% of shares in Company B, which in turn already holds 51% of shares of Company C, which in turn owns 26% of shares in Company D. Company D carries on activities specified in the Notifiable Acquisition Regulations, but Companies B and C do not.

Through the chain of majority stakes, Company A has indirectly acquired control in Company D. Because Company D carries on activities specified in the Notifiable Acquisition Regulations, this is a notifiable acquisition, meaning it must be notified and receive clearance from the government before it can be completed. Further guidance on notifiable acquisitions. In addition, Company A has also acquired direct control over Company B and indirect control over Company C, both of which may also be qualifying acquisitions (meaning they can be voluntarily notified and called in for scrutiny, even if they are not subject to mandatory notification requirements) if the relevant tests in the NSI Act are met.

If an indirect acquisition means that an acquirer has made more than one qualifying acquisition at the same time then a single notification may be sufficient. Parties in this situation should read this section: When you can submit a single notification for multiple acquisitions.

Different types of voting rights and mandatory notification

The NSI Act concerns acquisitions of control over qualifying entities and qualifying assets. In respect of entities, Section 8(6) means that the NSI Act applies to acquisitions of voting rights that enable a person to secure or prevent the passage of any class of resolution governing the affairs of the target entity.

Whilst the thresholds specified in sections 8(2) and 8(5) (i.e. over 25%, over 50% and 75% or more of shareholding or voting rights) have strong relevance in UK company law, companies can still set alternative thresholds, and entities that are not companies have greater flexibility to set alternative thresholds for passing or blocking resolutions (or their equivalent). Section 8(6) applies to these circumstances.

There are circumstances where parties have contractual rights that may have the effect of securing or preventing the passage of a class of resolution. These are frequently taken by minority investors when providing early-stage investment and may occur in other circumstances too.

The government considers that such contractual rights are not covered by the NSI Act under section 8(6) on the basis that such contractual rights are not themselves voting rights as set out in section 8(7), provided such contractual rights do not amount to control of such voting rights under paragraph 5 of Schedule 1.

In addition, such contractual voting rights would need to enable the acquirer to secure or prevent the passage of all resolutions of a particular class to be relevant for the purposes of section 8(6).

Notwithstanding the above, the government recognises that the breadth of matters which might be subject to investor consent is extensive. While minority investors may typically seek strong protections – particularly in the case of early-stage investment – the government is also mindful of those seeking to exert malign influence over sensitive businesses through the use of contractual rights.

That is partly why the NSI Act also defines control in section 8(8) as an acquisition which enables a person materially to influence the policy of the entity.

It may be, depending on the facts of the case, that contractual rights – either alone or together with other interests or rights – give an acquirer material influence.

Unlike voting rights in section 8(6), an acquisition of material influence is not subject to mandatory notification. However, the parties may submit a voluntary notification. Whether a notification is submitted or not, the Secretary of State may call in qualifying acquisitions where they reasonably suspect the acquisition may give rise to a risk to national security.

Internal corporate reorganisations

Entities carry out internal reorganisations for a range of reasons, including seeking to simplify the corporate structure, reduce compliance costs and reporting complexity, preparing part of a group for sale, and overall business rationalisation.

The government considers that internal reorganisations can be qualifying acquisitions where they result in an acquisition of control over a qualifying entity (as defined in Section 8 of the NSI Act), even if the ultimate beneficial owner of the entity remains the same.

Additionally, the acquisition may be subject to mandatory notification if it meets the relevant tests in the NSI Act.

The government recognises that most acquisitions of this kind will simply be a product of internal corporate restructuring and efficiency.

There may be rare cases where the acquisition of control over an entity by a person in the same business group raises national security risks. That may be true even if the ultimate beneficial owner is the same before and after the qualifying acquisition.

This is because an acquisition of control by another “link” in the corporate structure – particularly one where the ultimate beneficial owner is passive – could enable a hostile actor to pursue malign actions over the entity.

This diagram is an example of an internal reorganisation:

In this example the internal reorganisation involves the transfer of MidCo B’s 100% shareholding and voting rights in Company D to MidCo C.

While the ultimate beneficial owner, TopCo A is the same before and after the internal reorganisation – and their level of their indirect holding in Company D remains unchanged – this does not negate that MidCo C is acquiring control over Company D. This therefore constitutes a qualifying acquisition.

If Company D carries on activities in the UK that are specified in Notifiable Acquisition Regulations, this also requires mandatory notification. MidCo C must therefore notify the Secretary of State of the proposed acquisition and receive clearance before it can take place.

There are no statutory requirements under the NSI Act for the government to publish information about individual acquisitions prior to a final order being made. The government is, however, required to publish notice of the fact that a final order has been made.

This approach reflects the government’s intention to minimise the potential for the NSI system to create commercial distortions in the market.

The Act does not, however, preclude such announcements being made. This section sets out when such discretion may be exercised and the associated arrangements for doing so. The government considers that this will benefit stakeholders to plan accordingly, including where they choose to make their own statement about the notification/assessment process of an acquisition they are a party to.

There are a number of situations where this may be relevant, including:

  • where a party is a public company and has existing statutory obligations to inform the market of price-sensitive information
  • where a party wishes to communicate a decision publicly for business or reputational reasons
  • where a party is seeking to raise external awareness of the government’s consideration of an acquisition

General practice

The government will not publish information regarding the receipt (or not) and the acceptance or rejection of individual notifications.

The government may choose to publish information regarding call-in notices or final notifications (clearances) following the review period – primarily either where the parties disclose such information, or the acquisition is otherwise in the public domain and the Business Secretary considers it is in the public interest to do so.

For acquisitions in the previous paragraph, which are called in and subject to an interim order, the government will not publish information about the specific contents of any such order, but may choose to state that one has been made.

The government may choose to publish information regarding final notifications (clearances) following the assessment period – primarily either where the parties disclose such information, or the acquisition is otherwise in the public domain and the Business Secretary considers it is in the public interest to do so.

Process

Announcements will be made on GOV.UK

Where the government chooses to make a proactive announcement (i.e. rather than responding to a prior disclosure by one or more of the parties), it will ordinarily seek to provide advance notices to the parties of the planned announcement and to make it when the relevant markets are closed.

Review of the operation of the NSI Act processes

A wide variety of parties invest in the UK economy, including private enterprises, institutional investors, sovereign wealth funds, state-owned enterprises, and individuals. The test for whether an acquisition is a qualifying acquisition, and whether it requires mandatory notification, relies on the facts of that acquisition and whether it meets the relevant tests of the NSI Act, rather than the characteristics or nature of the acquirer.

The ISU has been asked over the past few months whether there are any plans to exempt certain businesses and investors. The NSI Act gives the government power to create exemptions from mandatory notification requirements based on the “characteristics” of the acquirer. There are currently no exemptions for any specific type of acquirers made under this power.

The government is monitoring closely how the NSI Act works in practice, analysing trends and risks to determine whether it would be appropriate to make exemptions to the mandatory notification requirements.

Any regulations which define exemptions to the mandatory notification system under the NSI Act would be subject to Parliamentary scrutiny.

By AKDSEO