National Security and Investment Act 2021 (‘the Act’) (Link)
In R3’s Technical Alert on 17 May 2021, members were informed that the Act had received Royal Assent on 29 April 2021, albeit the operative provisions of the Act will only come into effect once the necessary implementing regulations have been adopted, expected this year. However, the Act will have retrospective effect with respect to any transactions completing from 12 November 2020.
We can now confirm that the operative provisions of the Act will take effect on 4 January 2022 (link).
Guidance
Guidance has now been published about the Act. It can be found below:
2. How the National Security and Investment Act could affect people or acquisitions outside the UK
3. The National Security and Investment Act alongside regulatory requirements
4. NSI Guidance for the Higher Education and Research-Intensive sectors
The National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021 (‘Regulations’)
The Department for Business, Energy & Industrial Strategy has published draft Regulations for the 17 sensitive areas of the economy, which is available here.
Guidance on these regulations is expected to be published in the autumn.
R3 comment
There is an express carve-out for administrators and creditors in an administration (or similar proceedings under the insolvency laws of another country) contained within the Act. However, Insolvency Practitioners (‘IPs’) should still bear in mind the obligations placed upon a third party purchaser with regard to transactions involving the 17 high-risk/sensitive sectors subject to mandatory pre-completion notification/clearance and the impact that the requirements under the Act could have on distressed M&A transactions. Furthermore, the administrator carve out does not encompass liquidators.
The Act creates a mandatory pre-completion notification system for proposed acquirers of qualifying entities (and potentially qualifying assets) in any of 17 sensitive sectors of the economy perceived to be high risk (including data infrastructure, energy and transport) to seek approval from the Secretary of State before completing their acquisition. Whilst mandatory notification is likely to be rare for IPs, members may wish to ensure their internal checks cover this in the event the company is within the scope of the Act.