Insights from the latest UK NSI Act Report

Over the course of the Reporting Period, the Government received 906 notifications, up from 865 notifications received last year.² Of these, 753 were mandatory and 120 were voluntary. There were also 33 retrospective validation applications in respect of notifiable transactions which had closed prior to receiving NSIA approval. Only 3% of notifications were rejected, compared to 5% last year. Notifications were mainly rejected due to wrongful categorisation as mandatory instead of voluntary or vice versa. Incorrect categorisation causes delay and parties should ensure accurate classifications before submitting notifications.

Out of the notifications reviewed, only 41 (or 5%) were called in for further scrutiny. By comparison, 9% of reviewed notifications were called in last year.³ This supports the trend since the NSIA entered into force that only a small proportion of transactions raises potential national security concerns.

A disproportionately large number of voluntary notifications were called in, at 13% of the total number reviewed. By comparison, only 3% of mandatory notifications reviewed were called in. This can be explained by the fact that voluntary notifications are often made where there is some risk that a transaction might raise national security concerns.

Investors should also note that four call-in notices were issued for acquisitions which had not been notified under the NSIA by the parties. This shows that the Government's Investment Security Unit ("ISU") monitors the M&A industry, rather than solely relying on investors to notify transactions.