The National Security and Investment Act 2021 came into force on 4 January 2022. BEIS has published its first annual report, which has been made a statutory requirement by s 61 of the Act on 16 June 2022. It covers transaction notifications during the period of 4 January – 31 March 2022 and how they have been dealt with. Subsequent annual reports will cover the period 1 April – 31 March. Below are some key statistics from the report:
Number of notifications
- There have been 222 notifications, 196 of which were mandatory notifications and 25 voluntary. There was only 1 retrospective validation application received. Notifications received covered all 17 sectors.
Notifications Accepted and Rejected
- 178 mandatory notifications were accepted; 22 voluntary notifications were accepted. The 1 retrospective validation application was also accepted.
- 7 mandatory notifications were rejected; 1 voluntary notification was rejected.
Timescale for processing
- The average time for a mandatory notification to have been accepted was 3 days
- The average time to reject an application was 5 days for mandatory notifications and 12 days for voluntary notifications.
- 13 mandatory and 4 voluntary notifications called-in for further investigation. All decisions to call in these notifications took place within the statutory 30-day period, but ranged between 22-24 days on average.
Penalties, Sanctions and Final Orders
- As of yet, the report showed that there have not been any penalties or criminal sanctions imposed.
- No final orders, which imposes conditions to mitigate national security risks, have been issued.
The majority of mandatory applications were made in respect of the Defence and Military / Dual Use sectors, whilst most voluntary notifications were made in respect of professional, scientific and technical activities and data infrastructure.
All notifications and subsequent processing were kept within statutory timescales.
The statistics provided have only covered the first three months of the new notification regime. The report acknowledges that the number of notifications was lowers than was expected for the three-month period; however, it acknowledges that this is in part due to the lower number of mergers and acquisitions following the pandemic. Whilst the statistics seem to suggest a positive start to the regime, we hope to see more the number of notifications rise in the next annual report.
Although the report mentioned that all notifications and application processing were kept within statutory timescales, it seems that notifications being made should be substantively checked before submission. Most mandatory applications that were rejected were so rejected because they should have been submitted as voluntary applications. As such, perhaps the next annual report will have an increased number of voluntary applications, the processing timescale for which seems to be only slightly longer than that for mandatory notifications.
Businesses can expect “Market Guidance Notes” from the Government in due course, which aim to give practical advice about the NSI notification system.
Please contact Tim Cowen if you have any questions regarding the above.
The material contained in this article is only for general review of the topics covered and does not constitute any legal advice. No legal or business decision should be based on its content.