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07 Feb 2022

The long-awaited NSIA is now in full force


The UK's new investment screening regime under the National Security and Investment Act 2021 ("NSIA") came into force on 4 January 2022. The NSIA represents a comprehensive overhaul of the UK's previous legislative mechanisms for screening both foreign and domestic transactions on national security grounds. For the first time, the UK will now have a mandatory notification system in place for transactions which trigger certain thresholds and which concern one (or more) of 17 so-called "key" sectors of the UK economy. Additionally, the Department for Business, Energy and Industrial Strategy ("BEIS"), which will oversee the new NSIA regime, will have a broad discretionary power to "call-in" deals.  As a result, some parties may err on the side of caution and elect to make voluntary filings to BEIS under the NSIA, especially if the transaction raises any potential national security concerns (perceived or otherwise) that BEIS might be minded to investigate.

The NSIA is very broad piece of legislation. It has the potential to apply to a large number and variety of different transactions, from typical mergers, acquisitions and joint ventures to IPOs, loans, internal corporate restructurings, property acquisitions and even IP licensing deals. The NSIA, in particular, also has a very wide extra-territorial scope and is capable of applying to both targets and acquirers which are located in the UK and overseas. As a result, it is expected that BEIS will receive over 2,000 notifications per year under this new investment screening regime.

It is essential for parties looking to enter into any transactions in (or which may affect) the UK to fully understand the NSIA and its potential application to their transactions. Especially, given the significant consequences for failure to notify a mandatory notification or close a deal prior to receipt of clearance from BEIS (e.g. null and void transaction, significant fines, imprisonment up to 5 years for individuals). This briefing sets out the key aspects of the NSIA and what investors need to know to successfully navigate this new regime.

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