From Draftsmen to the Statute Books – The National Security and Investment Act 2021
The National Security and Investment Act 2021 (the “NSI Act”) received Royal Assent on 29 April 2021 but apart from a new piece of legislation appearing in the statute books, it doesn’t appear that much has changed, at least in the short-term. Our summary of the National Security and Investment Bill still stands, save for the amendments set out here.
How has the NSI Act changed from the Bill?
Despite engagement with several organisations, including the Law Society and the Institute of Chartered Accountants in England and Wales, concerning the drafting the of the National Security and Investment Bill (the “Bill”), few amendments were made during the Bill’s passage through Parliament.
The predominant change was to the shareholding and voting thresholds which would constitute a “trigger event”. The Bill provided that notification (whether mandatory or voluntary) and the government’s ability to “call-in” a transaction would apply if the transaction resulted in the acquirer holding a minimum of 15% of the votes or shares in the target entity. This is no longer the case and instead, the transaction must result in the acquirer holding above 25%. That said, voluntary notification and the “call-in” right may kick in where “material influence” has been acquired regardless of the number of shares or votes held.
Is the new regime under the NSI Act now fully operational?
No. In order for the new regime to become fully operational, various pieces of secondary legislation are required. Although the NSI Act enables these to be put in place, the government is not expecting the regulations to be finalised for the next few months; the latter part of this year is being eyed as the target date.
Will more guidance be provided?
Yes, the government intends to provide further guidance in relation to the regime in due course. Some guidance has already been provided in the government’s Statement of policy intent (last updated 2 March 2021) and we can expect to see more being published during the summer. The government also intends to “work closely with investors and businesses…to ensure they understand what is new”; something which will, no doubt, be welcomed by advisors, investors and businesses alike.
Should I be doing anything in the meantime?
Remember to consider transactions that you have entered into since November 2020 and any that you are currently considering or negotiating. Notification may be advisable if there is a chance that they could fall within the new regime.
We are more than happy to discuss this further with you or to assist with the notification process. Please contact a member of our Corporate team to chat about it further.
In the meantime, “watch this space” really does seem to be the most appropriate catchphrase…
Stuart Hatcher is a Partner and Lianne Baker is a Knowledge Development Lawyer in the Corporate team.
This note reflects our opinion and views as of 10 May 2021 and is a general summary of the legal position in England and Wales. It does not constitute legal advice.