UK Government responds to NSIA Consultation
The UK Government has published its response to its consultation on the National Security and Investment Act 2021 (NSIA), confirming targeted updates to the National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021 (NARs), which seek to improve clarity and proportionality in the application of the rules.
Background to this Consultation
A central feature of the NSIA is its mandatory notification regime, where Government approval is required before certain “notifiable acquisitions” can complete in respect of “qualifying entities” (any entity other than a private individual carrying on commercial activity in the UK) and “qualifying assets” (including land, tangible/moveable property and intellectual property/techniques of economic value) across 17 sensitive sectors of the UK economy. Such acquisitions will be notifiable to the Secretary of State where a “trigger event” (acquisition of greater than 25% of the shares/equivalent voting rights in the target entity, i.e. enough to prevent the passage of any class of resolution) is deemed to have occurred. There are currently 17 sectors in which a notifiable acquisition will trigger a mandatory notification, and these are defined in Schedules 1-17 of the NARs.
A statutory review published in December 2024 concluded that whilst the regime was operating effectively overall, there were opportunities to refine certain definitions, to enhance clarity and ensure the regime captures genuine national security risks without discouraging investment.
Scope of the Consultation
Following stakeholder feedback, the Government launched a 12-week consultation in July 2025. The consultation marked the first proposed update since the NARs came into force in January 2022.
Respondents highlighted several issues, including overly broad or unclear definitions, evidence of over-notification (particularly for low-risk or routine activities), the need for the regime to reflect significant technological advances and a desire to ensure the regime remains targeted, proportionate and investment-friendly, while protecting national security.
The consultation invited views on a number of key proposals, along with the restructuring of specific sector schedules in order to improve clarity, most notably through the separation of (i) Critical Minerals and (ii) Semiconductors from the broader Advanced Materials schedule (Schedule 1) into their own respective sector schedules. It also proposed the introduction of a new mandatory sector schedule for Water, increasing the overall number of schedules to 20, alongside proposed amendments to several existing sector schedules, including Artificial Intelligence, Communications, Energy, Data Infrastructure, Suppliers to the Emergency Services, and Synthetic Biology.
Government Response and Confirmed Changes
Following analysis of 41 consultation responses, the Government has confirmed a package of targeted reforms to the NSIA regime, describing these changes as “fine-tuning” rather than a fundamental overhaul. The reforms include the introduction of 3 new mandatory sector schedules:
- Critical Minerals – to align with the UK Critical Minerals Intelligence Centre’s list of 34 minerals.
- Semiconductors – to consolidate existing semiconductor activities with former computing hardware provisions.
- Water – a new notifiable sector (specific details of which were only provided to relevant stakeholders).
Significant refinements have also been proposed in the AI sector schedule, with mandatory notification being narrowed to entities that create or modify AI systems. Explicit exclusions will apply for routine commercial use, licensed third-party AI, and minor or low-risk modifications.
In the Communications sector schedule, the turnover thresholds will be amended to avoid capturing low-risk SMEs, while still ensuring critical providers of repair and maintenance services remain within scope.
Clarificatory amendments will also be introduced across the Critical Suppliers to Government, Data Infrastructure, Energy and Suppliers to the Emergency Services sector schedules. These changes will be supported by expanded statutory guidance aimed at improving legal and commercial certainty.
Changes not being taken forward
The Government has confirmed that it will not pursue further substantive narrowing of the Advanced Materials sector beyond the removal of Critical Minerals and Semiconductors into their own sector schedules. The Synthetic Biology sector schedule will also remain unchanged, reflecting the continued national security relevance of emerging technologies.
More generally, the Government has declined to significantly narrow certain core concepts such as ‘enablers’, where doing so could create security gaps.
Next Steps
The Government intends to introduce secondary legislation to Parliament to implement the amended NARs following this consultation at some point later this year. An updated impact assessment will be published alongside the statutory instrument, and revised guidance will be made available on GOV.UK. Ongoing engagement with stakeholders - particularly those operating in newly in-scope sectors such as water - has also been confirmed.
If you would like any further information or advice on the information mentioned within this article, please contact Niamh Magee from our Regulatory and Procurement team.
*This information is for guidance purposes only and does not constitute, nor should it be regarded as a substitute for, taking legal advice that is tailored to your circumstances.
