The Act is supplemented by the National Security and Investment Act 2021 ( Notifiable Acquisition ) ( Specification of Qualifying Entities ) Regulations 2021 / 1264 ( the “ Regulations ”), which specify the 17 sectors that fall within the scope of the mandatory notifications regime , set out in the table below .
Parties must obtain the approval of the Secretary of State for any notifiable transaction . Failure to obtain the Secretary of State ’ s approval prior to completion of a transaction will render it void , although the Act does include a mechanism transaction for obtaining retrospective approval .
Technology Advanced materials Artificial intelligence Cryptographic authentication Satellite and space technology Infrastructure Communications Data infrastructure Transport Public Sector Critical suppliers to Government Military and dual-use
Advanced robotics Computing hardware Quantum technologies
Synthetic biology
Civil nuclear Energy
Defence
Suppliers to emergency services
Voluntary Notifications
The Act also allows a purchaser to voluntarily notify a transaction that may not fall within the mandatory notification regime , but which may still give rise to national security concerns . An additional trigger event , the acquisition of material influence over the policy of a qualifying entity , is outside of the mandatory notification regime but may justify a voluntary notification . Parties can also make a voluntary notification in respect of an asset acquisition , which may be advisable if the asset transfer is perceived to pose a risk to national security .
By voluntarily notifying the Secretary of State of the transaction , the parties can obtain a decision as to whether the Secretary of State will exercise his or her call-in powers , providing parties with greater transaction certainty .
Call-in powers
The second key limb of the Act is the power of the Sectary of State to “ call-in ” a transaction for review , whether notified or not , if :
• a trigger event has occurred in relation to a “ qualifying entity ” or “ qualifying asset ” and the event has given , or may give rise to a risk to national security ; or
• arrangements are in progress or contemplation which , if carried into effect , will result in a trigger event taking place in relation to a qualifying entity or qualifying asset , and the event may give rise to a risk to national security .
Note that , in addition to “ qualifying entities ,” the Secretary of State may also exercise his or her call-in powers in relation to “ qualifying assets ”. An additional trigger event applies in respect of qualifying assets only if a purchaser acquires a right or interest in , or in relation to , an asset , and as a result gains the ability to use , direct or control the asset , or use , direct or control the asset to a greater extent than prior to the acquisition . A “ qualifying asset ” includes land , tangible moveable property and ideas , information or techniques that have industrial , commercial or other economic value . Acquisitions of assets that are located outside of the United Kingdom or the territorial sea that is used in connection with activities carried out in the UK or the supply of goods or services to persons in the UK may also be called-in for review .
The term “ national security ” is not defined in the Act to give the Secretary of State discretion and flexibility to exercise the call-in powers in light of the various threats to national security that may arise . The Secretary of State has issued guidance on when the call-in powers are likely to be exercised . In deciding whether to exercise the call-in power , the Secretary of State will consider the following risk factors :
• Target risk – whether the target of the acquisition is being used , or could be used , in a way that has a risk to national security ( with the 17 areas listed above creating a greater risk than other acquisitions );
• Purchaser risk – whether the purchaser has characteristics that suggest that there is , or may be , a risk to national security if the purchaser has control of the target ( with the purchaser ’ s sectors of activity , technological capabilities and links to entities that may seek to threaten or undermine the UK ’ s national security likely to be considered ); and
• Control risk – the level of control that has been , or will be , acquired through the acquisition ( with higher levels of control likely to give a higher risk to national security ).
The Secretary of State expects to call-in acquisitions that feature all three risk factors .
Following the issuance of a call-in notice , the Secretary of State will carry out a national security assessment . The Secretary of State may issue an interim order and then ultimately issue a final order in relation to the relevant transaction if the Secretary of State is satisfied , on the balance of probabilities , that a trigger event has taken place ( or that there will be a trigger event ) and a risk to national security has arisen , or would arise , from the trigger event , bracewell . com