Consultation to streamline National Security and Investment Act 2021 application - what do organisations need to know?

The National Security and Investment Act 2021 (NSIA), which gives the UK government powers to scrutinise and intervene in business transactions to protect national security, has been up and running since 4 January 2022. It requires the secretary of state to prepare an annual report, including details prescribed by the NSIA.

In this article we summarise some of the statistical data coming out of the NSIA Annual Report 2025 and provide details on a consultation launched to streamline the NSIA's application, which closes on 14 October 2025.

Statistics reported in the NSIA Annual Report 2025

The latest NSIA annual report was released on 22 July 2025, covers the period 1 April 2024 to 31 March 2025 and shows, amongst other things:

• In the reporting period, the investment security unit set up under the NSIA received 1,143 notifications, an increase from 906 notifications received in the previous reporting period. Of the 1,143 notifications received, 954 were mandatory notifications, 134 were voluntary notifications, and 55 were retrospective validation applications.
• The government accepted 1,110 notifications, an increase from 876 in the previous reporting period, and rejected 37 notifications during the reporting period, an increase from 24 notifications in the previous reporting period. The 1,110 accepted notifications comprised 942 mandatory notifications, 116 voluntary notifications and 52 retrospective validation applications.        
• Of the 1,079 notifications reviewed in the reporting period, in 95.5% of cases the parties were notified that no further action would be taken, and in 4.5% of cases the transactions were called in. In this reporting period, a total of 56 acquisitions were called in for further assessment, 16 were issued with final orders allowing them to proceed under certain conditions, and just one was ordered to unwind.
• In addition to the 49 notified acquisitions called in during the reporting period, seven non-notified acquisitions were issued with a call-in notice. Therefore, the government issued a total of 56 call-in notices in the reporting period, an increase from 41 in the previous reporting period.
• On average, it took 70 statutory working days or 100 calendar days to issue a final order from the point an acquisition was called in. For comparison, it took an average of 34 statutory working days or 53 calendar days to issue a final order from the point an acquisition was called in during the previous reporting period.
• The government identified 60 offences of completing notifiable acquisitions without approval. The report states that penalties were not imposed in these cases but parties were required to provide reassurance to the government that steps had been taken to prevent any future non-compliance.

Click here to read the full report.

Consultation on the proposed changes to the NSIA

Also on 22 July 2025, the Chancellor of the Duchy of Lancaster, the responsible minister, launched a 12-week consultation on proposed changes to the National Security and Investment Act (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021, also known as Notifiable Acquisition Regulations, to streamline the NSIA's application. The Notifiable Acquisition Regulations came into force in 2022, and set out which activities in the 17 sensitive areas of the UK’s economy bring an entity into scope of mandatory notification.

The current proposals are:

• Implement changes or clarifications to the scope of various of the key sectors in which certain transactions must be notified and cleared, in particular Advanced Materials, Artificial Intelligence, Communications, Critical Suppliers to Government, Data Infrastructure, Energy, Suppliers to the Emergency Services, and Synthetic Biology to ensure those areas are up to date.
• Create new standalone areas in which certain transactions must be notified, being Critical Minerals and Semiconductors. These are currently covered under Advanced Materials but the Government is separating them out to address supply-chain resilience.
• Adding water infrastructure and sewerage services to the areas subject to mandatory notification.

Subsequent to the initial announcements above in relation to the consultation, the government made a further announcement - to streamline the process and reduce red tape, they are proposing to remove internal reorganisations from the scope of the mandatory notification regime. For example where ownership remains within the same corporate group, a notification will no longer be required. The appointment of insolvency officeholders will be taken out of scope, easing the path for distressed mergers and acquisitions. 

The proposed changes will, in summary as the government expresses it:

• Loosen the scope on certain transactions where they are confident national security risk is unlikely to materialise, including certain parts of the AI and Energy areas.
• Bring in some new areas where proportionate, but keeping these to a minimum, namely by introducing a new schedule to mitigate risk in the water sector.
• Reflect areas where there are new risks, specifically in critical suppliers to government and suppliers to the emergency services.
• Improve clarity around the areas already covered, reflecting stakeholder feedback - including by creating standalone schedules for Semiconductors and Critical Minerals, which had previously been covered under Advanced Materials.

The government will publish additional guidance later in the year, responding to stakeholder queries. For more details on the consultation, which closes on 14 October 2025, please click the links below.

Consultation on the NSI Act Notifiable Acquisition Regulations - GOV.UK

National security powers to be updated to reduce the burden on businesses - GOV.UK

Key takeaways

• Note the proposed changes to the Notifiable Acquisition Regulations and in particular if the business involves the water sector. It's not yet clear if waste purification businesses will be caught in addition to sewerage services.
• UK buyers cannot rule out notification risk based on domestic ownership alone. For example, an overseas company producing goods for export to a UK company could be caught, but it must actually carry on UK activities, i.e. suggesting mere supply of goods or services to UK persons is insufficient, that fall within one of the current 17 sensitive sectors.
  
  Machinery located overseas used to produce equipment that is used in the UK is likely to make the overseas entity a qualifying entity if its staff travel to the UK and undertake business activities similar to working in a regional office, such as performing services for a UK client on a regular basis, but is not likely to be one if those staff solely conduct market research or are part of a sales team seeking new clients.
• In more complex scenarios, where a transaction is expected to be called in, assume at least three months from filing to clearance as opposed to the initial 30 day period.
• Chinese linked investments continue to be classed as high risk.
• When planning a transaction build in an appropriate window for analysis of the need to notify/seek clearance.
• If a corporate group is planning a major restructuring where the NSIA may be a concern, consider delaying it until the proposed secondary legislation in relation to the abolition of mandatory notification for internal reorganisations comes into force.

If you would like any further information on the above please contact Jocelyn Ormond, Andy Young or Charles Davies in the Ashfords corporate team.