Significant overhaul proposed to scope the National Security and Investment Act 2021 (NSIA)

The aim is to cut red tape and facilitate investment where national security risks were shown to be low, by:

1. Removing certain internal reorganisations and the appointment of liquidators from scope
2. Amending the definitions for the Artificial Intelligence, Critical Suppliers to Government, Communications, Energy, Synthetic Biology mandatory sectors to clarify which transactions are in scope, and remove those which are least likely to pose a risk to national security 

Meanwhile, new sectors will be created other sectors will be amended to capture new risks:

1. New sector for water and sewerage supply 
2. Standalone sectors for Critical Minerals and Semiconductors
3. More stringent or broader definitions for sectors including Data Infrastructure and Suppliers to the Emergency Services

Impact and actions

The Government has launched a consultation focusing on the 11 mandatory sectors being amended or proposed, which is open until 14 October 2025.

Many sectors were previously unclear and broadly defined, particularly AI and Data Infrastructure. This left some businesses unsure if a mandatory filing was required but choosing to submit one anyway given the consequences for failing to file (i.e. transactions are automatically void, fines and criminal sanctions).

The updated definitions also aim to more accurately target national security risks identified in the first three years of the NSIA, as well as expanding to newly identified risks. This includes the new Semiconductors sector, as well Communications, Energy, and Critical Suppliers to the Government and Emergency Services.

Provided the amended definitions are clear, businesses and their advisers will be better equipped to identify mandatory filings and understand potential national security concerns that need addressing.

Whilst details of intragroup transactions to be excluded are not yet confirmed, this is a welcome change particularly for larger, multinational groups where there was never change to the ultimate controlling entity.

Stakeholders invited to respond include investors and businesses active in the current or proposed mandatory sectors.