On 22 July 2025, the UK Government announced a set of proposed reforms to the National Security and Investment Act 2021 (“NSIA”) aimed at reducing unnecessary red tape for businesses. The NSIA and accompanying regulations provide powers for Ministers to intervene where an investment threatens UK national security.
The Government plans to remove certain low-risk transactions from the scope of the NSIA's mandatory notification regime. These low-risk transactions will include certain types of internal reorganisations and the appointment of liquidators, special administrators and official receivers. The Government has stated that their analysis shows that “these types of transactions rarely warrant investigation” and that this will ease the regulatory burden and help the government focus its attention on the transactions presenting a greater risk to national security.
These changes are still under development, so further details are not yet available. The Government has indicated that it intends to introduce secondary legislation to Parliament to implement them in due course, although the timeline remains uncertain.
Separately, the Government has also launched a consultation on the NSIA 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021 (the “Regulations”) which set out the areas of the economy subject to mandatory notification under the NSIA. The intention is to update and refine the scope of the Regulations to ensure the mandatory notification requirement remains targeted and proportionate (the “Consultation”). (The Consultation, on page 67, also give estimates for the costs of going through the NSIA process).
The Consultation proposes:
The Consultation is currently live and due to close on 14 October 2025. We will review the Government approach following collection of the Consultation feedback.
The Government has published its annual report into the application of the NSIA covering the period 1 April 2024 – 31 March 2025 (the “Report”).
The Report confirms that there were:
- 954 mandatory notifications;
- 134 voluntary notifications; and
- 55 retrospective validation applications.
- 95.5% were notified that no further action would be taken; and
- 4.5% were called in (being 49 transactions);
In the reporting period, the largest proportion of notifications was associated with the Defence sector of the economy (56%), followed by Critical Suppliers to Government (21%) and Military and Dual-Use (19%).
Of the 56 acquisitions called in, the largest proportion was associated with the Defence sector of the economy (37%), followed by Military and Dual Use (34%), Advanced Materials (29%) and Artificial Intelligence (29%).
In the reporting period, all decisions on whether to call-in or clear notified acquisitions were taken within the statutory review period of 30 working days.
The NSIA Annual Report provides a helpful indication of (amongst other things) (i) the levels of notified matters which may require further consideration, (ii) the levels of non-notified acquisitions which should have been notified but were not, and (iii) the economic sectors for transactions which are most likely to be called in for further scrutiny. As the legislation is refined we can hopefully look forward to clearer definition of the economic areas that are subject to mandatory reporting, and to fewer instances of non-notified acquisitions. If you have any questions about the NSIA and its implications for your business, please get in touch with James Stephen.
The information on this site about legal matters is provided as a general guide only. Although we try to ensure that all of the information on this site is accurate and up to date, this cannot be guaranteed. The information on this site should not be relied upon or construed as constituting legal advice and Howes Percival LLP disclaims liability in relation to its use. You should seek appropriate legal advice before taking or refraining from taking any action.
To contact us, please fill out this form and we will get back in touch as soon as possible. Your personal data will be processed in accordance with our privacy policy which can be found here.
Thank you for your enquiry. We will respond as soon as possible.
