Government Publishes Review of National Security and Investment Act Regulations

The Cabinet Office has released its first statutory review of the National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021 (NARs). These regulations identify 17 sensitive areas of the economy requiring mandatory notification under the National Security and Investment Act 2021 (NSI Act).

As mandated by section 4(1) of the NARs, the Secretary of State conducted the review and published a report summarising its conclusions.

The report reveals that the NARs are generally effective and achieving their intended goals. Key findings include:

Effective Coverage of High-Risk Activities: The regulations largely encompass high-risk activities, although a few additional activities, such as artificial intelligence and data infrastructure, may merit inclusion.
Proportionality of Coverage: The regulations are not disproportionately targeting low-risk activities, with only limited exceptions. Mandatory notifications for certain less frequently called-in activities reflect the government’s understanding of potential risks.
Stakeholder Understanding: Stakeholders generally understand their notification obligations, although minor drafting refinements to the NARs and associated guidance could improve clarity.

The report also highlights the importance of keeping the NARs aligned with evolving threats, market dynamics, and best practices. The government intends to continue monitoring and refining the regulations as necessary.

Source: Report on the National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021.