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National Security and Investment Act

The National Security and Investment (NSI) Act 2021 came into force on 4 January 2022 and grants the government the right to scrutinise and intervene in certain acquisitions made by anyone, including universities, businesses, and investors, that could harm the UK’s national security.

Where deemed appropriate, the government will be able to impose certain sanctions on acquisitions and even, on rare occasions, block or unwind acquisitions where necessary.

The government can call in an acquisition for assessment if it reasonably suspects that it is a qualifying acquisition that has given rise to, or may give rise to, a risk to national security. The right to call in can occur up to five years after the acquisition or whilst the acquisition is in contemplation or progress. Acquisitions completed before 12 November 2020 are outside the scope of these call-in powers.

The rules apply to acquisitions involving qualifying entities and assets (see below for examples). The NSI Act applies to transactions involving British as well as foreign partners.

Qualifying entities

A qualifying entity is any entity other than an individual, including a company, a limited liability partnership, any other body corporate, a partnership, or an unincorporated association or trust.

Examples of qualifying entities relevant to the higher education sector include a foreign or UK:

  • University, which is registered as a charitable organisation

  • Private university

  • Trust

  • University spin-out

  • University subsidiary (for example a company that a university has incorporated and carries out specific activities that the university operates)

  • Research organisation

  • Private company or corporation doing contractual work with a higher education institution or research organisation.

Qualifying assets

A qualifying asset includes land, tangible, moveable property, and ideas, information or techniques which have industrial, commercial or other economic value (‘intellectual property’).

Examples of qualifying assets relevant to the higher education sector include:

  • Designs

  • Plans, drawings and specifications

  • Software

  • Trade secrets

  • Databases

  • Source code

  • Algorithms

  • Formulae

  • Land

  • Tangible moveable property, such as laboratory equipment

An acquisition of a qualifying entity or asset is a called a qualifying acquisition if you acquire a right or interest in it, or in relation to it, and the level of control you acquire meets the thresholds specified in the legislation (see Article 8 for entities and Article 9 for assets). In the legislation, this is defined as a trigger event.

The Act is administered by the Investment Security Unit (ISU) in the Cabinet Office.

 

Notifications to government

The requirement for notifications only applies to qualifying acquisitions of entities in 17 sensitive areas the UK government considers likely to give rise to national security risks (see below).

17 sensitive areas of the economy

  • Advanced Materials

  • Advanced Robotics

  • Artificial Intelligence

  • Civil Nuclear

  • Communications

  • Computing Hardware

  • Critical Suppliers to Government

  • Cryptographic Authentication

  • Data Infrastructure

  • Defence

  • Energy

  • Military and Dual-Use

  • Quantum Technologies

  • Satellite and Space Technologies

  • Suppliers to the Emergency Services

  • Synthetic Biology

  • Transport

There are three kinds of notifications and applications universities can or must make to the government relating to the NSI Act:

  • Mandatory notifications: we are legally required to tell the government about acquiring entities (but not assets) in 17 sensitive areas of the economy (see Box 1).

  • Voluntary notifications: we can submit a voluntary notification if we are a party (acquirer or acquiree) to a completed or planned qualifying acquisition that is not covered by mandatory notification, and we wish to be certain whether the acquisition will be called in.

  • Retrospective validation applications: we can apply for retrospective validation if we have completed a notifiable acquisition without notifying.

The Research Governance & Compliance Team in R&IS will handle all notifications relating to research activities. Please contact R&IS if you think your activities require notification under the NSI Act, do not make notification directly without first contacting the Research Governance & Compliance Team.

NSI Act resources

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