UK Government provides more clarity on the scope of the National Security and Investment Bill (“NSIB”)

Key points to take away from this briefing:

• The mandatory notification regime under the NSIB imposes severe penalties on parties for any failure to notify a deal that falls within one of the 17 key sectors. Similarly, the Department for Business, Energy & Industrial Strategy (“BEIS”) has the power to call-in transactions taking place after 12 November 2020 which it considers may raise any national security risks. BEIS has identified that this will be more likely if the deal is involved in one of the 17 key sectors. Therefore, the draft definitions are of particular practical importance to deals being done now, recently and in the future both under the mandatory notification and call-in regimes.
   
• On 2 March 2021, the Government published its response to the Consultation on whether the 17 key sector definitions were sufficiently clear in their application and scope, following significant criticism that the definitions were far too broad and risked capturing a great number of transactions which would unlikely present national security concerns.
   
• BEIS has now narrowed the scope of the 17 key sectors, in some cases quite significantly, which is very much welcomed. However, the definitions will remain in draft form until after the NSIB passes into law (now expected in Autumn 2021), after which time secondary legislation will be passed in order to give legal effect to the same. BEIS will continue to engage with stakeholders over the definitions of the key sectors until this time. Therefore, it is possible that we will see still further changes made to the definitions before then.
   
• Fears still remain that the sector definitions are drafted broadly and will capture many different transactions unnecessarily, such that BEIS will be inundated with notifications once the NSIB receives Royal Assent, creating procedural delays and risking a flight on investment in the UK.

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