Key outcomes of the government’s response
New schedules
Critical Minerals will be carved out of the existing Advanced Materials schedule into a standalone schedule, covering all 34 minerals identified by the UK Critical Minerals Intelligence Centre. The government has acknowledged stakeholder feedback and will narrow the definition of “enabler” and limit which exploration and extraction land rights are caught, to reduce the capture of low-risk activities. Clients operating in the mining, resources, and extractive industries should pay careful attention to this new schedule, particularly given it’s deliberately forward-looking drafting to account for future production activities.
A standalone Semiconductors schedule will also be created, merging the former Computing Hardware schedule into it. While the government has declined to narrow the scope of the “enabler” definition or activities involving development and production – concluding that doing so would create significant gaps – it will provide updated guidance on the technologies covered.
A new Water schedule will bring water and sewerage undertakers into the scope of mandatory notification for companies that have statutory powers and/or duties to supply water services to specific premises, including larger New Appointments and Variations (NAVs) above a minimum size threshold, which is yet to be confirmed. This is a significant development for investors in the water sector and aligns with broader regulatory developments following the Independent Water Commission’s recommendations. As per the consultation, the schedule will cover the regional water and/or sewerage monopolies within England and Wales.
Changes to existing schedules
The Artificial Intelligence schedule has been substantively revised. In response to respondents’ concerns about the breadth of the original proposals, the government will exclude the end-use of AI systems for routine business activities, the use of licensed third-party AI systems, and certain routine modifications and testing activities. This is a notable narrowing of scope and will be welcomed by technology businesses. Clients that develop or modify AI systems should review their activities carefully against the revised schedule.
In the Communications schedule, the government will introduce a £5 million turnover threshold for Associated Facilities providers, while retaining cable landing stations within scope regardless of turnover. The government has also confirmed it will limit the repair and maintenance carve-in to companies that operate a cable repair vessel for subsea cables.
The Energy schedule will retain the strongly supported 500MW incremental capacity thresholds to reduce unnecessary notifications, along with drafting clarifications to address inconsistencies identified by respondents. It also adds a provision on multi-purpose interconnectors, including a large cumulative capacity threshold. Additionally, although the Energy schedule will maintain the number of businesses in scope for notification, clarifications to the definition will likely decrease the volume of notifications.
The Critical Suppliers to Government schedule will incorporate an important drafting amendment, narrowing the trigger for generating OFFICIAL-SENSITIVE data from “will or could result in” to “will or is likely to result in”. The Data Infrastructure schedule will add all third-party operated data centres as well as certain Cloud Service Providers and Managed Service Providers, with the government declining to introduce materiality thresholds.
Implementation
The government has confirmed it will lay secondary legislation in Parliament later in 2026, accompanied by an updated impact assessment and comprehensive revised guidance across all schedules.
Reed Smith’s contribution to the consultation
Reed Smith’s London Competition Team submitted a detailed response to the consultation on 14 October 2025. Our response raised a number of substantive concerns. We highlighted that the technical complexity of the Notifiable Acquisition Regulations (NARs) means that most businesses will continue to require professional legal advice to determine whether a transaction falls within scope, and that the government’s cost estimates – including an assumption of zero legal costs for Small and Medium-Sized Enterprises (SMEs) – were unrealistic. We recommended the introduction of de minimis thresholds to protect SMEs from disproportionate compliance burdens. We also raised detailed sector-specific concerns, including the broad scope of the AI and Critical Suppliers to Government schedules; the inconsistent treatment of subcontractors across sectors; the risk of double regulation in sectors already overseen by bodies such as Ofcom, Ofwat, and Ofgem; and the need for comprehensive practical guidance with worked examples throughout.
Why this matters for businesses and next steps
The forthcoming changes to the NARs will have real, practical consequences for businesses transacting in affected sectors. The introduction of three entirely new mandatory notification schedules – covering Critical Minerals, Semiconductors, and Water – means that transactions previously outside the mandatory regime may now require prior clearance before completion. Completing a notifiable transaction without prior approval is a criminal offence under the National Security and Investment Act (NSIA). Revisions to existing schedules – particularly in AI, Data Infrastructure, Communications, and Critical Suppliers to Government – will also alter the scope of what is covered; while some changes narrow scope, others – such as the expansion of the Data Infrastructure schedule to include all third-party operated data centres, Cloud Service Providers, and Managed Service Providers – bring new categories of business within scope for the first time. As Reed Smith noted in its consultation response, the absence of de minimis thresholds means that even small transactions may require costly external legal advice, which may be disproportionate to the transaction’s value. Businesses should additionally be aware of the risk of double regulation: several affected sectors – including energy, water, and communications – are already subject to change of control notifications under their respective sector regulators (Ofgem, Ofwat, and Ofcom), and the new NARs will sit alongside, rather than replace, those existing obligations.
Businesses operating in any of the affected sectors should review the government’s consultation response carefully and seek early legal advice on whether the forthcoming amendments to NARs affects their transaction activity. Given the complexity of the revised schedules and the government’s continued reliance on guidance to address definitional ambiguity, prompt engagement with specialist advisers remains essential.
Overall, companies will need to consider the NSIA comprehensively and take it into account within their business timeframes as well as in share purchase agreement warranties.
Client Alert 2026-074