Summary
November has seen a number of developments in preparation for full implementation on
Mandatory filing and approval required to close transactions
From
Qualifying deals which exchange in 2021, but which will not complete until on or after 4 January are subject to the mandatory filing regime, and completion may not occur until after clearance from BEIS is received. As a practical matter, whilst it may be possible to shorten the 30 working-day initial review period from notification through prior informal interaction with BEIS this year, parties should be alive to the fact that they may not be able to complete pending "no-issues" transactions in the period between 4 January and
The mandatory filing regime has broad application and will be triggered by deals of any value, and can apply to non-
Managing "call-in risk"
Transactions which do not meet the criteria for a mandatory filing (because, for example, they are asset acquisitions, or the target's activities do not fall precisely within the definition of the 17 sensitive areas, or the relevant share thresholds are not crossed) may nevertheless be subject to call-in for review where the Secretary of State reasonably suspects a risk to national security.
The finalised guidance on call-in is notable in reeling back the expansive approach taken to national security risk in the prior draft. The
The Government has also provided some comfort in response to other scope concerns raised during the consultation stage, noting expressly that "loans, conditional acquisitions, futures and options are unlikely to pose a risk to national security and so are unlikely to be called in", and that "sovereign wealth funds" or foreign state owned/affiliated entities are "not inherently more likely" to pose national security risk than other acquirers. Nevertheless, transaction and financing parties may be expected frequently to seek to mitigate call-in risk, particularly where transaction timetables allow, by making voluntary notifications for clearance.
This call-in risk applies retroactively to all transactions which are entered into (since
More broadly, the updated and finalised guidance confirms to a large extent the draft position communicated by the Government in the summer. For more information, see our earlier articles on the regime here, here and here.
The 17 sensitive areas are below. We would be happy to provide further details on the precise definitions in your sector and how the NSI Act applies to your transactions.
1) Advanced Materials | 2) Advanced Robotics | 3) Artificial Intelligence |
4) Civil Nuclear | 5) Communications | 6) Computing Hardware |
7) Critical Suppliers to Government | 8) Cryptographic Authentication | 9) Data Infrastructure |
10) Defence | 11) Energy | 12) Military and Dual Use |
13) Quantum Technologies | 14) Satellite and Space Technology | 15) Suppliers to the Emergency Services |
16) Synthetic Biology | 17) Transport |
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It is important to bear in mind that the
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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