Earlier this summer, the UK government announced a review of the National Security and Investment Act 2021 (NSI Act), aimed at ensuring its requirements are "targeted and proportionate" (read our June 2025 Insight here). On 22 July 2025, the Chancellor of the Duchy of Lancaster confirmed that reforms are indeed in the pipeline. Additionally, the government plans to publish further guidance on the NSI Act regime based on stakeholder feedback, and to look for further ways to increase transparency.
The government will legislate to ensure that some types of internal reorganisation and the appointment of liquidators, special administrators and official receivers do not trigger mandatory notification obligations. No further details of these proposed exemptions have been given. Separately, the government is consulting on changes to the mandatory notification obligations set out in the National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021. The proposals reflect feedback from the previous government's call for evidence on the NSI Act regime, and also findings from a statutory review of the Regulations published last year.
Under the proposals, there would be new separate categories for semiconductors and critical minerals, which are currently covered by the category of advanced materials. There would also be some changes to the definitions of critical minerals. The new standalone semiconductors definition would be merged with the computing hardware definition.
The water industry will be added to the specified mandatory notification areas, reflecting its critical infrastructure status. This would bring a minimum of 17 water operating companies into the scope of the regime and generate an expected 1-5 notifications per year.
Updates are also proposed to the existing definitions of artificial intelligence, communications, critical suppliers to government, data infrastructure, energy, suppliers to the emergency services, and synthetic biology.
The government estimates that the overall change in the number of mandatory notifications per year would be between -10 and +35.
The government has also published its 2024-2025 annual report on the operation of the regime. The report shows that of the 1,079 notifications reviewed, 95.5% resulted in no further action being taken, and 4.5% were called in. Seven non-notified acquisitions (identified through market monitoring) were called in. 17 final orders were issued; one of these was in respect of a non-notified acquisition. Five called-in acquisitions were withdrawn before a decision was made. All decisions whether to call in or clear notified acquisitions were taken within the statutory review period of 30 working days.
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