National Security and Investment Act – Don’t Get Caught In the Trap

If you’re considering the sale or purchase of a business or its assets, you need to be aware of the National Security and Investment Act 2021 (NSIA). The NSIA gives the Government wide powers to review, call-in and impose conditions to certain corporate transactions.

Many transactions that appear to be routine investments, acquisitions or group restructures can trigger a requirement to notify the Government of the transaction before completion. This is particularly relevant where the target company operates within one of the UK’s 17 sensitive sectors, which are:

A transaction which relates to a business involved in one of these sectors may require consideration of the NSIA, even where national security concerns are not obvious. The legislation focuses on the nature of the business’ activities and the level of control being acquired, not simply the size of the deal.

The consequences of getting it wrong can be severe. A transaction that should have been notified to the Government, but which completed without the required approval may be legally void and can expose the parties to significant penalties, including fines of up to 5% of global turnover or £10 million, whichever is higher, and potential imprisonment of individuals for up to five years.

For that reason, NSIA should be considered at an early stage of every corporate transaction. Early screening can help identify issues before they affect deal timing, completion mechanics or transaction costs. At BHW Solicitors, NSIA forms a key part of our transaction risk review process.

If you are considering an acquisition, investment, restructuring or share transfer, our Corporate Team can help you to assess whether a notification is required and guide you through the process. Please contact the Corporate & Commercial department by emailing info@bhwsolicitors.com or by calling 0116 289 7000.