Recent years have seen a marked shift away from the era of economic globalisation since the (first) Cold War.  Economic sanctions and export controls are increasingly prominent issues for legal, commercial and financial professionals. Consistent with that theme, many governments are paying more attention to the national security implications of corporate transactions involving foreign investors (e.g. the Huawei/5G network debate). 

Earlier this month, the British government published draft legislation that is a substantial departure from its traditional laissez-faire and welcoming approach to foreign investment into the UK. The National Security and Investment Billi (the “Bill”) enables the government to intervene, investigate, impose conditions upon, and even prevent, proposed share or asset deals that present a relevant national security risk. In short, one may describe the Bill as ushering in Britain’s equivalent of the CFIUS framework in the United States of America. Investors and their advisers should monitor how the Bill develops through Parliamentary debate in the coming months. As it stands, however, foreign investors into Britain can expect greater regulatory scrutiny in this area and, in relevant cases, a consequential delay for deal completion. 

The Bill

In overview, the Bill seeks to introduce:

  • Mandatory notification by any person who gains control of a company or certain assets (specifically, land, tangible property or “ideas, information or techniques which have industrial, commercial or other economic value” – such as trade secrets and source codeii) in any one of 17 strategic industrial sectors. At present, those sectors are:
    • Advanced materials
    • Artificial intelligence
    • Autonomous robotics
    • Civil nuclear
    • Communications
    • Computing hardware
    • Critical suppliers to Government
    • Critical suppliers to the emergency services
    • Cryptographic authentication
    • Data infrastructure
    • Defence
    • Energy
    • Engineering biology
    • Military or dual-use technologies
    • Quantum technologies
    • Satellite or space technologies
  • A catch-all voluntary notification process– for any other transaction where the parties believe that their deal may raise national security concernsiii.
  • ‘Call in’ powers for the Secretary of State for Business, Energy and Industry Strategy (the “Minister”) to notify the deal parties and then subject the proposed transaction to a national security assessment. When deciding whether to exercise that power, the Minister must consider:
    • The target risk, i.e. the nature of the target company/business;
    • The trigger event risk, i.e. the type and degree of control that the acquirer would gain through the transaction; and
    • The acquirer risk, i.e. whether and how the purchaser presents issues for UK national securityiv.

Any such transaction that completed without government clearance would be invalidv.

  • Information-gathering powers for the Minister to compel the production of documents (an ‘information notice’) and/or witness evidence by interview (an ‘attendance notice’)vi .
  • Specific criminal offences for completing a relevant deal without approvalvii or failing to comply with any information notice or attendance noticeviii.
  • Monetary penalties for certain breaches, which the Minister must determine to the criminal standard of proofix. Any such penalty must not exceed the higher of £10 million or 5% of the company’s global annual turnoverx.

Process following notification

  • Initial review period – 30 working days for the BEIS to review a notification.
  • Further review – if not allowed to proceed, the transaction will be subject to a further-in depth investigation, lasting a further 30 working days, extendable by another 45 working days. This power can be exercised up to 5 years after a trigger event.
  • Interim orders – to prevent parties from taking pre-emptive action.
  • ‘Final order’ – either:


-Approval subject to conditions – remedial measures to protect UK national security, which could include imposition of a compliance/oversight monitor or supervisor within the companyxi; or

-Prohibition – or unwinding of a transaction.


  • House of Commons readings took place on 11 and 17 November 2020.
  • The legislation is expected to be passed by Parliament in 2021, with some aspects to have retrospective effect from 12 November 2020.
  • The government has opened a public consultation on which industrial sectors should be within the mandatory notification regime under the Bill. The consultation is scheduled to close on 6 January 2021.

If you have any questions, or for further information please contact Anupreet Amole and Mark Dorff.

ii Clauses 7(4) and 7(5)
iii Clause 18
iv See the draft Statement of Policy Intent at
v Clause 13
vi Clauses 19 and 20
vii Clause 32
viii Clause 34
ix Clause 40
x Clause 41
xi Clause 26(5)(b

The views expressed herein are solely the views of the authors and do not represent the views of Brown Rudnick LLP, those parties represented by the authors, or those parties represented by Brown Rudnick LLP. Specific legal advice depends on the facts of each situation and may vary from situation to situation. Information contained in this article is not intended to constitute legal advice by the authors or the lawyers at Brown Rudnick LLP, and it does not establish a lawyer-client relationship.