Modern industrial strategy: updates to National Security and Investment Act under review

Many of you will know that the Government published, on 23 June, its Modern Industrial Strategy paper and, with it, committed to creating a “predictable, proportionate, and transparent investment screening framework” and launching a 12-week consultation on updating the definitions of the 17 sensitive sectors of the economy as set out in the National Security and Investment Act 2021 (NSIA).
 

Based on this consultation and the (Conservative) Government’s response last year to a call for evidence on NSIA that it launched in late 2023, we anticipate that:

• The Advanced Materials, Cryptographic Authentication, Defence and Data Infrastructure specified sector definitions will be re-drafted for greater clarity.  
• A new standalone Semiconductor specified sector will be introduced, reflecting the increasing strategic importance of this area of the economy.
• There will be some form of carve-out for certain transactions that would otherwise fall within the scope of the mandatory reporting regime. Whilst we don’t expect a materiality threshold to be introduced, we think it’s likely that internal reorganisations (or a subset of them) will be exempted.
• More detailed narrative will be provided around decisions, thereby helping parties and their advisers better-informed assessments about whether to notify their deals.

It is reassuring to see that the current Government has continued with the previous administration’s policy of regularly assessing and streamlining NSIA in order to strike a balance between protecting UK national security on the one hand and facilitating (or at least not stifling) potentially growth-enhancing transactional activity on the other.

further information

If you have any questions regarding this blog, please contact Glafkos Tombolis in our Corporate, Commercial & Finance team. 

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Glafkos advises a broad range of corporate and private clients on M&A, joint ventures, private equity and growth capital transactions and general company law matters.