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This blog willÌýtryÌýtoÌýprovide an overviewÌýof the new NSI ActÌýasÌýclearly and concisely as possible.ÌýNevertheless,Ìýyou shouldÌýalwaysÌýconsultÌýÌý-Ìýyou can find a list of official resources on the matter at the bottom of this blog.ÌýÌýÌý

This blog is intended asÌýhigh-levelÌýinformationÌýonly, andÌýdoes not constitute legalÌýadvice.ÌýPlease refer to theÌýfull government guidance forÌýmore detailedÌýinformation on the NSI Act.Ìý

What is the NSI Act?ÌýÌý

TheÌýAct will grant theÌýÏã¸ÛÁùºÏ²Ê¿ª½±½á¹ûÌýgovernment the right to scrutinise and intervene in certainÌýbusiness or commercialÌýacquisitions made by anyone, including universities, that could harm the Ïã¸ÛÁùºÏ²Ê¿ª½±½á¹û’s national security.ÌýThe government will be able to impose certain conditions on an acquisition, and inÌýrare instances,ÌýitÌýmay unwind or block an acquisition completely.Ìý

This means that fromÌý4ÌýJanuaryÌý2022, wheneverÌýyouÌýare contemplating, commencing, orÌýcompletingÌýan acquisitionÌýyou need to:Ìý

• Check if the rules apply to your acquisition. This will depend on what you are acquiring and how much control you have over it.Ìý

• Check if you need to tell the governmentÌýaboutÌýyourÌýacquisition. You will be legally required to inform the government about certain acquisitions of entities if your acquisition is in a sensitive area of the Ïã¸ÛÁùºÏ²Ê¿ª½±½á¹û economy.Ìý

• Tell the government about your acquisitionÌýif it falls under the remit of the NSI Act.ÌýYou can do this online by submitting a notificationÌýform.Ìý

AfterÌýcompletingÌýthese steps,Ìýthe government will review your acquisition. It can either clear your acquisition, impose certain conditions, or block it.Ìý

Responsibility for notification lies with the acquirer, not the funder of a projectÌýor the party that sells an entity or asset. Whoever acquires a qualifying entity (more on this below) has the legal responsibility to notify the government.

What kind of operations are covered by the NSI Act?Ìý

TheÌýNSI act requires you to notify the government if you are acquiring entities or assetsÌýinÌýone of 17ÌýareasÌýof the economyÌýdeemedÌýsensitive to national security.Ìý

If you are acquiring a qualifying entityÌý(i.e.Ìýa company or organisation with legal rights)ÌýorÌýa qualifyingÌýassetÌý(i.e.Ìýtangible or intangible property with value)Ìýrelated to one of these 17 fields, youÌýmightÌýhave to inform the government of your acquisition.ÌýAs long asÌýthe acquisition has a link to the Ïã¸ÛÁùºÏ²Ê¿ª½±½á¹û, it falls under the scope of the law,Ìýwhich meansÌýthatÌýeven if you areÌýacquiring something basedÌýoffshore, you stillÌýhave toÌýcomply.Ìý

When do I have to notify the governmentÌýof an acquisition?Ìý

Your acquisition is a ‘notifiable acquisition’ if it meets the following criteria:Ìý

1. You are acquiring aÌýqualifyingÌýentityÌý(not an asset)Ìýthat carries out certain activities in the Ïã¸ÛÁùºÏ²Ê¿ª½±½á¹û within one of 17 sensitive areas of the economyÌý(listed above).Ìý

2. Any of the following apply:Ìý

   1. Your shareholding stake or voting rights increase:Ìý

   • from 25% or less to more than 25%Ìý

   • from 50% or less to more than 50%Ìý

   • from less than 75% to 75% or moreÌý

3. Your acquisition is of voting rights,Ìýand this will enable you to secure or prevent the passage of any class of resolution governing the affairs of the entity.Ìý

A thing to note is that the NSI Act is retroactive. If you have completed any qualifying transactions between 12 November 2020 and 4 January 2022, you must report them to the government via a specific retroactive validation form.

. This page allows you to submit mandatory notifications. It also allows you to submit retroactive notifications which were discussed above, as well as voluntary notifications of acquisitions (mostly assets which do not fall under mandatory notification) you believe the government should be informed of.

What happens next?

The government expectsÌýthatÌýthe vast majority ofÌýnotifiable acquisitions will beÌýcleared.ÌýAs mentioned earlier,ÌýtheÌýActÌýisn’t higher education-specificÌý– it also applies toÌýprivateÌýbusinessesÌýandÌýinvestors.Ìý

That being said, youÌýdo have toÌýget prepared. Not only will you have to build the NSI Act intoÌýyour existing due diligence practices, but you willÌýalsoÌýhaveÌýtoÌýinform the government of any qualifying acquisitions commenced or completed betweenÌý12 November 2020 and 4 January 2022, as noted above.Ìý

WhereÌýcanÌýIÌýfind more informationÌýon this?Ìý

The NSI scheme will be administered by a dedicatedÌýteamÌýat the Department for Business, Energy & Industrial Strategy, who have provided aÌýrangeÌýofÌýÌýguidance on the matter.ÌýYou can find a non-exhaustive list of these here:Ìý

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