Government publishes updated guidance on national security powers

The announcement fulfils a commitment made by the Deputy Prime Minister in a speech delivered last month at Chatham House, whereupon he promised to publish updated guidance about national security powers to ensure the National Security and Investment Act remains as supportive of investment as possible by giving stakeholders the information they need to plan ahead.

The updates include a new ‘Section 3 statement’ that sets out how the Deputy Prime Minister expects to exercise powers under the Act to call-in certain acquisitions for scrutiny. This is the first time the statement has been updated since the legislation came into force in January 2022.  

The new statement builds on the previous version by affording more information to better explain how the Secretary of State has used – and will continue to use – the Act’s powers.

Specific updates include the following:

*Trigger events (including the circumstances in which certain acquisitions could be considered under the National Security and Investment Act, such as the incorporation of new entities and the formation of joint ventures)

*Targets of acquisitions (including how the Government may consider technology transfer risks when reviewing asset acquisitions)

*Acquirers (including where the Government may see risk from UK acquirers or acquirers that have previously been cleared through the National Security and Investment Act-centred system

*How decisions are made (including improved examples of how the Government assesses target risk, acquirer risk and control risk)

Additional Market Guidance

The Government has also published additional Market Guidance about the operation of the National Security and Investment Act. This includes guidance on how the 2021 Act can apply to outward direct investment and specific information for universities, thereby helping academics to decide when to notify acquisitions to the ISU, including new examples.

The updated guidance has been compiled following extensive consultation with stakeholders through the National Security and Investment Act Call for Evidence that the Deputy Prime Minister launched back in November.

The National Security and Investment Act gives the Government powers to scrutinise and intervene in business transactions (such as takeovers) in order to protect national security, while providing businesses and investors alike with the certainty and transparency they need to do business in the UK.

To date, the Government has reviewed over 1,700 notifications and made 22 necessary and proportionate final orders under the National Security and Investment Act 2021 to protect national security.

Oliver Dowden explained: “We’re committed to protecting the UK’s national security, while making sure we remain the best place in the world to invest. The additional guidance for businesses gives them a better understanding of the National Security and Investment Act 2021, fulfilling my commitment to use our national security powers in a precise and proportionate way. By being transparent with businesses, we’re creating a predictable foundation for future investment, which will help in delivering on our plan to grow the economy.”