National Security and Investment Act update: proposed amendments to the Notifiable Acquisition Regulations

On 22 July 2025, the Government published its Annual Report on the National Security and Investment Act 2021 (NSIA) and, concurrently, launched a formal consultation on its proposed amendments to the Notifiable Acquisition Regulations (NARs).

Annual Report 2024-25: A Snapshot

Over the past year, 1,143 notifications were received, with the vast majority being mandatory. Of the 1,079 acquisitions reviewed, 95.5% were cleared without further action, and 56 transactions were called in for in-depth review.  

Our key takeaways are:

• Call-ins were focused around defence, military and dual-use technologies.
• Deals involving China appear to continue to attract scrutiny.
• Although 60 breaches of the mandatory notification requirement were identified, no penalties or prosecutions were pursued. Instead, companies were required to provide assurances to prevent recurrence.

For businesses, the report offers a degree of reassurance. The high clearance rate and relatively consistent adherence to statutory timelines suggest that the regime is functioning predictably. However, the concentration of call-ins in a small number of sectors and the continued scrutiny of UK-based acquirers highlight the importance of early risk assessment and sector-specific analysis. Businesses operating in sensitive areas or engaging with overseas investors should remain alert to the potential for intervention, even where a transaction may appear low-risk on its face.

Consultation on amending the NARs: key proposals

The Government’s consultation, open until 14 October 2025, proposes a series of targeted amendments to the NARs. These changes aim to improve clarity, reduce unnecessary notifications, and ensure the regime is proportionate to the risks it seeks to address.

This follows the Cabinet Office’s response to its November 2023 call for evidence – summarised in our earlier article (Government sets out next steps for the UK investment screening regime) – which outlined five priority areas for reform, including updated guidance, technical exemptions, and a commitment to consult on changes to the mandatory notification regime.

Key proposals include:

• Reorganising the structure of the NARs to improve clarity and accessibility for businesses and advisers.
• Creating standalone areas for semiconductors and critical minerals, which currently sit within broader categories. While the semiconductor changes are not expected to significantly increase notifications, the new critical minerals area could capture more transactions as UK production scales to meet net zero targets.
• Introducing water as a new mandatory area, in response to concerns about the sector’s resilience. Retail-only operators in the non-household market would be excluded from mandatory notification but may still be subject to call-in under the government’s broad discretionary powers.
• Refining existing areas, including:
• Artificial Intelligence – narrowed to exclude low-risk applications, in recognition of the fact that the rapid expansion of this technology means that a large and increasing number of businesses now involve AI to some degree.
• Advanced Materials – expanded to include rare earth elements.
• Synthetic Biology – simplified exemptions for gene and cell therapies.
• Critical Suppliers to Government – narrowed to 24 ministerial departments.

These changes would increase the number of mandatory areas from 17 to 19, although in practice this reflects only one new area (water) due to reclassification. The Government estimates the net impact on notifications will be modest, with a change of between 10 fewer and 35 more notifications annually.

Insolvency situations and internal reorganisations

In parallel with the consultation, the Government has also announced its intention to remove the requirement to notify certain internal reorganisations and the appointment of liquidators, special administrators and official receivers.

These changes, which will require legislation in due course, respond directly to market feedback and are intended to reduce the administrative burden on businesses where transactions are unlikely to raise national security concerns. This, in turn, will allow the focus to be on those transactions that may present a genuine risk.

We view these changes as pragmatic and sensible, reflecting the low risk to national security from internal reorganisations/insolvency situations.

We will continue to monitor developments in this area.

With thanks to Bijou Kaye, a current trainee in the team, for contributing to this article.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, July 2025