National Security and Investment (NSI) Act
The National Security and Investment Act came into force on 4 January 2022.
The Act grants the UK government the right to scrutinise and intervene in certain acquisitions made by anyone, including universities, businesses, and investors, that could harm the UK’s national security. The government will be able to impose certain conditions on acquisitions. In rare instances, the government may unwind or block an acquisition completely. The government can assess acquisitions up to 5 years after they have taken place, however it cannot call in and assess acquisitions completed before 12 November 2020.
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What is within scope of the NSI Act?
The Act states mandatory notification for qualifying entities and voluntary notifications for qualifying assets.
Entities and assets might be qualifying entities and qualifying assets if they are from, in or have a connection to the UK.
Further guidance on acquisition of entities or assets outside the UK can be found here.
Qualifying acquisitions are identified via their ability to meet certain thresholds documented within the NSI Act. These thresholds relate to the level of control that will be granted following the acquisition to the acquirer.
Further information on thresholds can be located here.
- What is a Qualifying Entity
A qualifying entity is any entity other than an individual, including a company, a limited partnership, any other body corporate, a partnership, or an unincorporated association or trust.
Examples within higher education and research sector may include, but is not limited to:
- University, which is registered as a charitable organisation
- Private university
- Trust
- University spin out
- University subsidiary (e.g. a company that a university has incorporated and carries out specific activities that the university operates)
- Research organisation
- Private company or corporation doing contractual work with a higher education institution or research organisation.
- What is a Qualifying Asset
Qualifying assets include land, tangible, moveable property, and ideas, information or techniques which have industrial, commercial or other economic value (“intellectual property”).
Examples of qualifying assets within the higher education and research sectors may include but is not limited to:
- Designs
- Plans, drawings and specification
- Software
- Trade secrets
- Databases
- Source code
- Algorithms
- Formulae
- Land
- Tangible moveable property, such as laboratory equipment
- Mandatory Notification
Mandatory notifications are required for acquisitions for qualifying entities within the 17 sensitive areas of the economy as these are considered more likely to give rise to national security risks.
These areas are:
- Advanced Materials
- Advanced Robotics
- Artificial Intelligence
- Civil Nuclear
- Communications
- Computing Hardware
- Critical Suppliers to Government
- Cryptographic Authentication
- Data Infrastructure
- Defence
- Energy
- Military and Dual-Use
- Quantum Technologies
- Satellite and Space Technologies
- Suppliers to the Emergency Services
- Synthetic Biology
- Transport
Further guidance on each of these areas can be located here.
- Voluntary Notification
You are not legally required to tell the government about the acquisition of a qualifying asset.
However, you can submit a voluntary notification if you are a party to a qualifying acquisition that is not covered by mandatory notification. This voluntary notification can provide clarity and assurance as to whether the government is going to call in the acquisition.
The government is more likely to call-in acquisitions of qualifying assets that are connected with the 17 sensitive areas of the economy.
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How to make a notification?
You can submit a notification form using the National Security and Investment notification service.
This service can be used to submit the following acquisitions.
- Mandatory notification
- Voluntary notification
- Retrospective validation application form (where a notifiable acquisition was completed without notification to the Government)
- Hypothetical Scenarios of Acquisitions within the scope of NSI Act
Hypothetical examples of possible qualifying acquisitions within the Higher education and research sector can be found here.
- Resources