Regime applies to UK domestic as well as foreign acquirers

Since the National Security and Investment Act 2021 (NSIA) came into force on 4 January 2022, the UK government has made clear it will use its full toolkit – prohibitions, remedies, and retrospective call-ins – to address national security concerns in transactions. 

Crucially, domestic deals are not immune from review: the UK government reviews domestic deals where acquisitions are made by UK buyers. For instance, the government intervened in the UK-based private equity firm Epiris’ acquisition of Sepura (a communications business). This is different from many other foreign direct investment regimes (such as The Committee on Foreign Investment in the United States), where the regime does not usually apply to purely domestic transactions. In the last reporting period (for the year ending 31 March 2025), the Investment Security Unit (ISU) (which administers the operation of NSIA) received 1,143 NSIA notifications. Of the notifications accepted by the government, 65% involved acquirers associated with the United Kingdom.

As of 25 March 2026, out of the thousands of applications made to the ISU since the NSIA came into force in January 2022, the ISU has only prohibited six transactions and imposed conditions on more than 30 transactions. Principally, but not exclusively, these prohibitions have impacted Chinese-controlled buyers.

Why this matters for your next deal

The NSIA’s 17 mandatory notification sectors are broad, and uncertainty around their boundaries means many more transactions are caught than parties might initially expect. The preventive step is to perform NSIA analysis early in the deal. Rejected and incomplete notifications delay deal timelines, and a prohibition renders a completed transaction void. Therefore, transactions that fall into the mandatory notification regime must not be completed without first obtaining UK government approval. 

There are three areas where parties are most often caught off guard:

1. Internal restructurings can trigger a fresh notification. A qualifying entity (i.e., a company or business caught by the NSIA regime) that moves to a different subsidiary in the corporate chain – even where the ultimate beneficial owner stays the same – may constitute a change of control under the NSIA and require mandatory approval before the transfer happens. If possible, buyers planning post-acquisition integrations should map out where the qualifying entity will sit in the group structure before completing the deal and make this clear in their initial application to avoid subsequent NSIA notifications being required to move the new entity within the buyer’s group.
2. Asset acquisitions are in scope. While not subject to mandatory notification, acquisitions of qualifying assets – including IP rights and development rights – fall within the government’s call-in power. Dealmakers may therefore find voluntary notification advisable to ensure deal certainty for asset deals touching or closely related to a sensitive sector. During the year ending March 2025, parties to transactions filed 134 voluntary NSIA notifications. Voluntary notifications can give deal certainty, as otherwise the UK government generally has a long time after closing (which can be up to five years) to call in a transaction. 
3. The quality of your notification can impact your timeline. Most transactions will receive clearance within the 30-working-day assessment period. However, it is worth factoring in the time needed to gather information for the notification and remembering that the review period only starts once the notification is accepted, and that the ISU will reject filings that lack sufficient detail. Structure charts must include all shareholders with a 5% or greater ownership share, full board details (including PEP status), and a clear picture of the pre- and post-acquisition ownership chain. The acquirer bears ultimate responsibility for accuracy: Knowingly or recklessly providing false or misleading information is a criminal offence carrying fines, imprisonment, or both. Therefore, it is important to ensure that the notification is properly completed with sufficient detail before submission. That said, unnecessary information should be avoided, as it can waste time and increase costs. 

Are changes coming to the NSIA regime? 

On 12 March 2026, the UK government published its response to the consultation on proposed reforms to the NSIA regulations covering the activities within the scope of the NSIA. The government has said it will introduce schedules in the following specific areas: critical minerals, semiconductors, and water, as well as amendments to the scope of AI that is caught, and other targeted amendments to activities within communications, energy, critical suppliers to government, and data infrastructure.

Although the government’s policy agenda includes plans for an exemption for intragroup restructuring, the timing and specific details of such amendments to the NSIA have not yet been published.

What you should be doing

Build NSIA analysis into your deal process from day one. Identify whether the target’s activities fall within any of the 17 mandatory sectors and engage with the target early to gather the detailed operational information the ISU will require. 

Think about the merger control angle. Notifying the ISU can have knock-on effects for your merger control strategy, because the ISU and the UK Competition and Markets Authority (CMA) share information under a memorandum of understanding. Some parties now proactively submit a briefing note to the CMA’s mergers intelligence committee to explain why a separate competition filing is not required.

Get your SPA drafting right. NSIA clearance should be a condition precedent. Consider asking the seller for warranties that they have complied with the NSIA previously. Always ensure that there is an information-sharing obligation imposed on the seller so that the acquirer can submit a complete and accurate notification.

Conclusion

The NSIA regime is now a settled part of the UK deal landscape, and the UK government’s willingness to intervene shows no sign of easing. The cost of getting it wrong – voided transactions, criminal liability, and reputational damage – means that early-stage analysis and high-quality notifications are not optional; they are a core part of deal execution. Reed Smith can guide you through the process and, where required, make the NSIA application on your behalf, helping to make the buying process more efficient.