National Security and Investment Act: A Review of Past Trends and a Look Ahead to Future Reforms

We last covered the National Security and Investment Act 2021 (NSIA) when it had only just come into effect in 2022. Since then, we’ve had a chance to see how the regime operates in practice, to analyse emerging trends and to assess its impact on companies and investors alike. The Government has also had time to reflect upon aspects that could be improved, and has launched a public consultation on proposed amendments to the Notifiable Acquisition Regulations 2021, which clarify and ensure the proportionality of the NSIA.

In this article, we highlight key findings from the Government’s latest annual report (2024-25) and outline its proposed reforms.

Notifications and call-in notices are increasing

The first notable statistic from the Government’s annual report (found here: Annual Report) is that notifications to the Government have increased from 906 in 2023-24 to 1,143. We previously outlined the three types of notifications under the NSIA here: National Security and Investment Act 2021. In brief, these are:

• mandatory notifications – required when the acquirer crosses certain ownership or voting thresholds in a company operating in one of the 17 core sectors;
• voluntary notifications – submitted when notification isn’t mandatory, but the acquirer seeks to check if the Government will call it in; and
• retrospective validation applications – submitted when a transaction has already completed without notifying the Government, where notification was mandatory.

Each type of notification saw increases: mandatory notifications from 753 to 954; voluntary notifications from 120 to 134; and retrospective applications from 33 to 55. These increases suggest that investors and companies are generally becoming more cognisant of the notification requirements and the risks of non-compliance (which could render the transaction void and trigger penalties).

Additionally, call-in notices – which signal to the acquirer that a detailed assessment by the Government is required – rose from 41 to 56. Seven such notices concerned non-notified transactions, where the Government reasonably suspected a risk to national security. While no penalties or prosecutions were issued for breach of notification requirements, the increase signals more active scrutiny from the Government, even in the absence of notification.

Defence remains most prevalent sector

As in previous reports, the most prevalent area was Defence, accounting for 56% of all notifications received, and the largest proportion of call-in notices, final notifications and final orders. This was expected, given the current geopolitical landscape and the sector’s inherent exposure to national security risks. We can also expect this trend to continue into future years as the Government, through its Defence Industrial Strategy, is increasingly investing into the sector as an opportunity for growth.

Based on the number of call-in notices, other heavily scrutinised sectors were:

• Military and Dual Use (29%)
• Advanced Materials (27%),
• Energy (25%),
• Artificial Intelligence (22%).

Meanwhile, Communications dropped to just 6% of call-in notices, as compared to 24% in the 2023-24 report, which may reflect a shift in the Government’s priorities.

A watchful eye on China and the US

Naturally, the vast majority of activity caught by the NSIA was domestic, with 65% of notifications coming from UK acquirers. However, the Government is clearly paying close attention to China and the US as well:

• 32% of call-in notices involved acquirers associated with China.
• 20% involved acquires associated to the US.
• 7 of the 17 final orders issued were linked to China and 3 to the US.

US acquirers made up roughly a fifth of the total notifications made to the Government, whereas Chinese acquirers accounted for just 1%. This seems to suggest lower engagement with NSIA requirements from Chinese investors, although in spite of this, they are also more likely to have their acquisitions called in.

Clearances high, but enforcement tightening

Finally, it is important to consider the actual consequences of the NSIA for investors and companies: a called-in transaction can result in either a final notice, which imposes conditions or prohibits the acquisition, or clearance by final notification.

Of the 52 called-in transactions, 35 were cleared and 17 resulted in final orders—up sharply from just 5 final orders in 2023–24. This may well suggest that the Government is taking a more assertive approach to enforcement. Indeed, in one case, the acquirer (a company wholly owned by five Chinese funds) was ordered to sell its entire 80% shareholding back to the target — a decision that was unsuccessfully challenged by the acquirer in a judicial review case (R (FTDI Holding Limited) v Chancellor of the Duchy of Lancaster [2025] EWHC 241 (Admin)).

The Cabinet Office has launched a public consultation on proposed changes to the Notifiable Acquisition Regulations 2021, which can be found here: Consultation. The consultation is open until 14 October 2025, and any company or investor operating within the 17 mandatory areas can submit their views. Key proposals include:

• Adding Water as a new mandatory area – covering companies with statutory powers and duties to supply water or sewerage services, but excluding retail suppliers in the non-household retail market.
• Creating two standalone mandatory areas of Critical Minerals and Semiconductors, which are both currently covered under the broad area of Advanced Materials.
• Changes and clarifications to certain areas – most notably, a narrowing of the scope of Artificial Intelligence to exclude low-risk activity, in light of the rapid expansion of businesses using AI. Other areas of proposed changes are Advanced Materials, Computing Hardware, Critical Suppliers to Government, Energy and Synthetic Biology.

In addition to the consultation, the Government has announced proposals to remove mandatory notification requirements for internal reorganisations and the appointment of liquidators, special administrators and official receivers, recognising these to be low-risk. Secondary legislation on these changes will follow, aiming to reduce unnecessary burdens on businesses.

We’ll continue to keep a close eye on developments and will provide further updates as the consultation progresses and legislative changes take shape.