NSIA Update: What investors/buyers need to know

Notifications increase

There was a significant increase in notifications, with 1,143 notifications submitted (up c.26%). A majority of these were mandatory notifications (c.83%), but there was also a notable rise in voluntary and retrospective notifications.

This reflects a clear trend that parties are increasingly engaging with NSIA earlier and more proactively.

The NSIA regime remains efficient at the front end, with 97% of notifications typically accepted within 7 to 8 working days. Rejections are rare and generally procedural (e.g. incorrect track or insufficient detail).

Call-ins

Only around 5% of transactions are called in for detailed review. This remains broadly consistent year-on-year, with the ISU issuing call-in notices within 29 working days after acceptance.

The sectors most affected were defence (36%), followed military and dual-use (29%), advanced materials (27%) and energy (25%). There are no surprises here.

While geopolitical factors remain influential, the data shows that UK acquirers accounted for nearly half of all call-ins, followed by China (32%) and the United States (20%).

Final orders

Whilst most called-in transactions are ultimately cleared (67% without further action), there has been a significant rise in final orders (including conditional approvals and one order to unwind a transaction outright). 17 final orders were imposed (up from 5 the previous year).

Most final orders related to the defence and military and dual-use sectors, and most involved UK-based acquirers.

Intervention risk is real and rising and needs to be assessed early in the transaction process.

Consultation outcomes

The UK Government’s consultation on the Notifiable Acquisition Regulations (NARs) seeks to tighten and clarify sector definitions, reduce unnecessary notifications (particularly in areas such as AI), improve the usability of the regime and provide updated and more detailed guidance with clear examples and practical interpretations across the sectors. This is to be encouraged.

The improvements seek to ensure the NSIA regime remains appropriately targeted, captures genuine national security risks and reflects technological and market developments, without discouraging investment.

Key takeaways for investors

• NSIA is a routine consideration in UK transactions;
• early NSIA analysis is essential to avoid unnecessary complications and retrospective notifications;
• while the proportion of call-ins remains relatively low (c.5%), the likelihood of intervention following a call-in has increased significantly, with a notable rise in final orders;
• investors should be mindful of high-risk sectors, ensure that notifications are made correctly and promptly and with sufficient detail to mitigate the possibility of extended timelines if a transaction is called in for review;
• acquirer nationality remains a key risk factor, but UK acquirers are also attracting scrutiny;
• the UK Government is seeking to reduce unnecessary notifications, but not to relax scrutiny in genuinely sensitive areas;
• comprehensive and detailed guidance is awaited; and
• investors should continue to monitor developments and continue to build additional time into transaction timetables to accommodate for NSIA analysis and submission of notifications.

This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.

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   • Mark Tasker

   • Partner
   • Corporate

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   • Enea Aniaj

   • Solicitor
   • Corporate

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