The UK Government has announced that its powers to review transactions under the National Security and Investment Act 2021 will come into force on 4 January 2022.
From this date, investors or acquiring companies must notify the Government of acquisitions of targets that fall into any of the 17 specified sectors which are considered sensitive to national security (explained in our blog on the original Bill, our follow-up on the Act becoming law and our updates on the definitions applying in relation to energy, transport, communications and critical suppliers to government: some definitions have been further refined and we will be writing about those shortly). Notifiable deals that complete from 4 January onwards will therefore need to have advance approval, on pain of the deal being void and the buyer being exposed to criminal and civil penalties.
This is also the date from which the Government can exercise its power to 'call in' and potentially block / unwind any deal it reasonably suspects as giving rise to a national security risk, with parties able to voluntarily notify their deals to the Government to avoid that outcome from the same date. That power will extend to retrospectively calling in for review deals that completed from 12 November 2020 onwards, though the Government is willing to informally engage with parties to such deals in advance of the call-in power taking effect. See our original post on the call-in regime for more. The Government has launched a further consultation on the exercise of that broad call-in power, which among other things indicates that if an acquisition that completed between 12 November 2020 and 3 January 2022 involved a target falling within the 17 key sectors, it will be more likely to be called in retrospectively. Targets related to those areas but not covered by mandatory notification may then be most at risk of being called in going forward, if not notified voluntarily.
Further detail on the new regime is still to be provided, but the latest announcements will bring some clarity for those involved in M&A deals that might not complete until 2022.