The National Security and Investment Act 2021

Proposed amendments and consultation

Helen Mather, Partner

In July 2025, the cabinet office published a consultation on the proposed amendments to the National Security and Investment Act 2021(NSIA).

The NSIA is the national security regime which:

• allows the UK Government to “call in” acquisitions (or contemplated acquisitions) of control of (or increased interests in) qualifying entities or assets (including shares in companies) which could cause a national security risk in the UK, to undertake a full national security assessment; and
• requires that certain transactions (if they are in one of 17 specified sectors) are notified to the UK Government in advance of the transaction completing in order to obtain mandatory advance clearance.

Completing a transaction in one of the 17 sectors without the necessary clearance (even if there are no actual national security concerns or risks associated with it) means the transaction is void and there are civil and criminal penalties for completing the transaction without obtaining  the necessary clearance. A civil penalty could require the acquirer of the asset or interest to pay up to 5% of the organisation’s global turnover or £10 million, whichever is greater. Criminal penalties can include prison.

Even if the transaction does not require a mandatory clearance, the government may still “call-in” the transaction for review. If the Government does this and decides that a national security risk exists, it can impose necessary and proportionate remedies for the purpose of preventing, remedying or mitigating that risk and this could include the Government:

• requiring a person to do or not do particular things
• requiring the appointment of a person to conduct or supervise certain activities
• restricting access to sensitive sites, confidential information and/or supply chains
• requiring the transaction to be unwound.

To avoid the risk of the Government exercising its “call-in” rights, voluntary advance clearance of the transaction from the Government can be requested.

The proposed changes could have a considerable impact on the number of deals which require mandatory clearance. They include:

• To remove certain transactions from the scope of the NSIA. These include certain types of internal reorganisations and the appointment of liquidators, special administrators and official receivers. This will be welcomed by businesses and professionals where getting clearance can delay matters in circumstances that are often time critical or where there is no actual change of control of the company in real terms.
• To increase the number of sectors requiring mandatory clearance from 17 to 19. Two sectors (Semiconductors and Critical Minerals) which are currently within the same sector (Advanced Materials) are proposed to become their own individual sectors. Semiconductors would be merged with the Computing Hardware sector whereas Critical Minerals would become its own new standalone sector.
• A further new sector proposed to be included is water. This is understandable as we have seen recent instances of water infrastructure becoming a victim of cyber incidents such as when South Staffordshire PLC, the parent company of South Staffs Water and Cambridge Water announced they were subject to a data breach caused by a cyber attack.

This demonstrates that the NSIA and its scope will be kept under constant review as the National Security and technology landscape changes and bad actors find new ways to seek to attack the UK’s National Security.

Given the severity of the consequences, if you are in any doubt as to the application of the NSIA in relation to (and/or the requirements for clearance or the Government’s ability to “call in”) your transaction you should take legal advice and if still in doubt err on the side of caution and make a mandatory or voluntary application for clearance and obtain such clearance before proceeding with your transaction.

The closing date for the consultation is 14 October 2025.

If you require any further information on the NSIA or proposed changes to NSIA, please contact a member of the Corporate Department.