Since the United Kingdom implemented the National Security and Investment Act in January 2022 ("NSI Regime"), there has been a significant increase in state intervention in, and review of, business transactions in the United Kingdom, including for international transactions involving targets with limited activities in the United Kingdom.
Although the NSI Regime is often described as the United Kingdom's foreign direct investment law, it is limited neither to transactions involving foreign entities (like CFIUS in the United States), nor to direct investments. Indeed, the coverage of the NSI Regime is broader than transactions that might ordinarily be considered "investments" because it may require a filing for certain license agreements, financing arrangements, and insolvency proceedings, among others. Instead, the NSI Regime is a broad investment control regulation.
Over the last year, the UK government has extensively deployed its new powers, reviewing many hundreds of mandatory notifications, calling in dozens of deals for detailed national security assessments, imposing conditions on nine transactions, and prohibiting three. Some of the matters that have attracted the most attention from the UK government are those you would expect—deals in the defense and national security sectors. However, other deals—including one in which the UK government imposed remedies involving an acquisition of an equity interest of just 12.1%—might come as a surprise to many businesses.
This White Paper provides an overview of the NSI Regime and lessons from transactions that have been called in over the last year. It also highlights implications for a range of specific client sectors that we have seen commonly arise since the introduction of the regime.
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