News Update

New National Security and Investment Bill means tougher screening measures for investment into UK Companies

On 11 November the UK Government introduced to Parliament a new National Security and Investment Bill (Bill) which provides for a new screening regime for investment into UK Companies.

Provisions for screening foreign direct investment have long been considered by the Government, with a White Paper published in July 2018. The Bill, however, appears to go beyond the original suggestions set out in the White Paper, with the notable inclusion of a mandatory notification regime.

The Bill will create a new statutory body within the Department of Business, Energy and Industrial Strategy to review proposed transactions on national security grounds.   This review will be separate from competition review conducted by the Competition and Markets Authority.

The key provisions of the Bill are as follows:

  • The Bill will create a mandatory notification regime for acquisitions within certain sensitive sectors.
  • The Government has not set out in the Bill what part of these sectors will be subject to the mandatory notification procedure (which is to be defined in secondary legislature), but it expects some transactions in the following 17 sectors to require mandatory notification: civil nuclear; communications; data infrastructure; defence; energy; transport; artificial intelligence; autonomous robotics; computing hardware; cryptographic authentication; advanced materials; quantum technologies; engineering biology; critical suppliers to Government; critical suppliers to the emergency services; military or dual-use technologies; and satellite and space technologies.
  • The mandatory regime proposed under the Bill will apply to investors from any country and will be triggered on the acquisition of “material influence” in a Company (regardless of turnover or market share).
  • Acquisition of “material influence” shall be considered as any of the following:
      • the shares that the acquirer holds in the entity increase from: 25% or less to more than 25%; 50% or less to more than 50%; or less than 75% to 75% or more;
      • the shares or voting rights that the acquirer holds in the entity increase from less than 15% to 15% or more; or
      • o the acquirer obtains voting rights in the entity that enables it to secure or prevent the passing of any corporate resolution governing the affairs of the entity.


  • The regime may also be triggered by the acquisition of control of an asset. This will include all land, tangible moveable property and (in relation to intellectual property) any idea, information, or technique with industrial, commercial or other economic value.
  • The Bill also introduces a hybrid regime which, alongside the mandatory notification, includes a voluntary notification process for other sectors to notify the Government of “trigger events” which the acquirer considers may be of interest from a national security perspective.
  • When assessing a ‘risk to national security’, the following criteria will be considered:
    • Target risk – the nature of the target and whether the entity/asset could be used to threaten national security;
    • Trigger event risk – the risk that the type/amount of control being acquired could provide the acquirer with the ability to threaten national security; and
    • Acquirer risk – the extent to which a person acquiring control has the potential to threaten national security.


  • The Bill includes a five-year retrospective “call-in” power, allowing the Government to review any acquisitions post completion which were not caught by the mandatory notification provisions.
  • On receiving a notice, the Government will have a maximum of 30 working days to decide whether to call in a transaction to further scrutinise a transaction for national security concerns.
  • Those companies that do not comply with the new regime could face fines of up to 5% of worldwide turnover or £10 million (whichever is the greater) and/or imprisonment of up to 5 years.
  • Any transactions which required, but did not obtain, clearance via the mandatory notification procedure could be deemed void.

So, what implications will the Bill likely have on UK Companies and transactions with foreign investors?

  • In removing any turnover and share of supply thresholds and including acquisitions of assets, the scope of the Bill is very broad, with transactions involving the acquisition of minority shareholdings as low as 15% potentially triggering the mandatory notification obligation.
  • The notification procedure may cause significant delays and costs for businesses (the Government predicted yesterday of 1,000-1,830 notifications per year).
  • The call-in powers for voluntary notification under the Bill, which can be exercised for up to 5 years retrospectively, are significantly longer than comparative EU provisions (15 months), whilst the Mandatory Notification provisions remain susceptible to Government intervention for an indefinite period (if you fail to notify).  This likely will create uncertainty for transactions, unless prior approval is sought and granted.

Alongside the Bill, the Economic Secretary to the Treasury issued a written statement on 11 November 2020 announcing the Government’s intention to bring forward a precautionary power to block securities listings on a UK public market on national security grounds.

All market participants should keep a close eye on how the Bill develops through Parliament and the issuance of supplementary legislation.

Should you wish to discuss the impact of the Bill on a potential acquisition or require further information about anything covered in this article, please contact Peter Kohl, Joan Yu, Martin O’Donoghue, Coral Yu, Arthur Horsfall or your usual contact at the firm.


This briefing is a general summary of the information contained in the Bill and it should not replace legal advice tailored to your specific circumstances.



Key Contacts

Peter Kohl
Head of Corporate
+44 20 7539 7082
Joan Yu
Head of Capital Markets
+44 20 7539 7083
Martin O'Donoghue
Partner, Corporate
+44 20 7539 7268
How can we help?

Would you like our experts to assist you with your legal requirements?

  • By completing this form you agree to your details being used to email you the information requested in accordance with our Privacy Policy.