News & Commentary


  1. What is it and when?

On 4 January 2022, the National Security and Investment Act will come into force in the UK, under which the UK government will be able to audit, intervene in and potentially halt acquisitions and investments in sectors which are a possible risk to the UK’s national security.

While it will only take full effect in January 2022, it will have a retrospective application to transactions made after 12 November 2020 if there is reasonable suspicion that the deal has security implications in the UK.

  1. Which deals will be hit? It’s all about control

Any transaction that involves an acquisition of an element of control, even over minor shareholdings, could have to go through an advanced clearance process.

  1. Which Sectors Are Affected?

The Act designates 17 “sensitive” areas of the British economy, some of which will be highly applicable to Israeli business owners with operations in the UK. These are:

  • Advanced Materials
  • Advanced Robotics
  • Artificial Intelligence
  • Civil Nuclear
  • Communications
  • Computing hardware
  • Critical Suppliers to Government
  • Cryptographic Authentication
  • Data Infrastructure
  • Defence
  • Energy
  • Military and Dual-Use
  • Quantum Technologies
  • Satellite and Space Technology
  • Suppliers to the Emergency Services
  • Synthetic Biology
  • Transport
  1. What Are the Notification Requirements?

Businesses and investors operating within these industries will most likely be legally obligated to notify the government of any corporate transactions in which they engage (called “mandatory notification”).

Entities which fall outside of the high risk sectors, but engage in acquisition or investment transactions which may raise national security concerns (including transactions involving high risk assets such as IP), may still be called in for review (called “voluntary notification”).

  1. A retrospective example

A topical example of how the Act will apply can be found in the case of Immarsat, a British communications company which was recently acquired by Calornia-based Viasat. Although this was announced in November 2021, it is likely that the deal will be reviewed and will undergo regulatory scrutiny. This is one of many examples of retrospective investigations that the government will be at liberty to conduct in 2022.

  1. Risks of non-compliance

Ministerial powers to intervene and block takeovers will not be limited to big ticket deals or entities falling into higher revenue brackets, so even smaller businesses must be aware of their duty to notify.

Failure to comply will cause the acquisition to be deemed void and also may result in civil or criminal penalties. This includes fines of up to 5% of global turnover or £10 million (whichever figure is larger), and, from an individual perspective, the suspension of directors for up to 15 years and/or imprisonment of up to 5 years. It may also be that conditions are imposed on a deal for it to happen.

During review, these transactions will acquire a “standstill” status, with no movement until governmental clearance is obtained. It makes sense to notify as early on in the transaction as possible, to reduce delays to deal completion.

  1. How will Israeli businesses be affected?

In short, time and complexity need to be factored into transactions.

Mandatory notifications may be more obvious, but whether a voluntary notification is needed, and how the rules apply in industries one-step removed from the mandatory markets, is likely to be more complicated.

Processes may be delayed by the entitlement of the government to an initial 30 working day period to determine whether to issue a call-in or proceed with a further more comprehensive review. In the event of a call-in notice, the government will have an additional 30 working days, with the option to extend by 45 further days (and potentially longer if given the consent of convening parties), to finalise a decision. The government can then block and reverse deals.

This legislation also risks discouraging foreign investment into the UK, considering the time constraints it will place on deals.

However, the NSI Act has been praised for explicitly stating that “loans, conditional acquisitions, futures and options are unlikely to pose a risk to national security and so are unlikely to be called in”and maintaining that “sovereign wealth funds” or foreign-affiliated or owned organisations are “not inherently more likely” to carry national security concerns than other acquirers.

  1. Next steps

Finalised guidance will be released towards the end of December 2021 and any updates can be found on the website. In the meantime, our Corporate Team will be keeping a keen eye on any significant developments and will be updating clients who may be affected.

For the time-being, investors and entities should review their deal documentation and, in particular, their due diligence processes for investment or acquisition deals, since this will speed up their ability to progress with deals once the NSI Act comes into effect.

For more information and assistance with the NSI Act, please contact. 


This article was written by: Simon Weinberg, Technology Partner and  Deborah Tastiel, Associate and Specialist in Intellectual Property and Technology Law