If you are a party acquiring a qualifying entity or asset in an area that is likely to give rise to national security risks, you might be required by law to notify the government. The 17 sensitive areas of the economy that the government has identified are:

• Advanced Materials
• Advanced Robotics
• Artificial Intelligence
• Civil Nuclear
• Communications
• Computing Hardware
• Critical Suppliers to Government
• Cryptographic Authentication
• Data Infrastructure
• Defence
• Energy
• Military and Dual-Use
• Quantum Technologies
• Satellite and Space Technologies
• Suppliers to the Emergency Services
• Synthetic Biology
• Transport

The law only applies to qualifying acquisitions (entities or assets) referred to as trigger events in the NS&I Act. The acquisition is a qualifying acquisition if all the following apply:

• The acquisition is of a right or interest in, or in relation to, a qualifying asset or qualifying entity.

• The entity or asset being acquired is from, in, or has a connection to the UK.
• The level of control acquired over the qualifying entity or qualifying asset meets any of the following thresholds:
• Shareholding stake or voting rights in a qualifying entity meets or crosses certain percentage thresholds (for example, it becomes higher than 25%).
• Acquire voting rights in a qualifying entity that allows passing or blocking resolutions governing the affairs of the entity.
• Ability to materially influence the policy of a qualifying entity, for example by acquiring the right to appoint members of the board of the entity that enables you to influence the strategic direction of the entity.
• Ability to use a qualifying asset, or ability to direct or control its use, or to do so more than prior to the acquisition.

A qualifying entity is any entity other than an individual, including a company, a limited liability partnership, any other body corporate, a partnership or an unincorporated association or trust. This could include:

• A university spin-out
• University subsidiary
• Research organisation or research institute

Qualifying assets include land, tangible moveable property and ideas, information or techniques which have industrial, commercial, or other economic value i.e., ‘intellectual property’ such as:

• Designs/plans, drawings, or specifications
• Software, databases, trade secrets
• Source code, Algorithms, formulae
• Tangible moveable property, such as Laboratory equipment

Mandatory notifications

Mandatory notifications are required for qualifying entities. The trigger events for mandatory notification are:

• The acquisition of more than 25 percent, more than 50 percent, or 75 percent or more of the voting rights or shares in a qualifying entity.
• The acquisition of voting rights enabling or preventing the passage of any class of resolution governing the affairs of the qualifying entity.

Voluntary notifications:

Trigger events which apply under the voluntary regime (i.e., which do not require mandatory notification) are as follows:

• The acquisition of material influence over a qualifying entity’s policy.
• The acquisition of a right or interest in, or in relation to, a qualifying asset providing the ability to use or control the asset (either entirely or to a greater extent).

For an introduction to the NSI Act read this guidance. There is further tailored guidance for the higher education and research-intensive sectors with hypothetical examples showing qualifying acquisitions which the government will be able to call in for assessment if it reasonably suspects the acquisition has given rise, or may give rise, to a national security risk.

The NSI Section 3 statement provides further information on how the government expects to use its call-in power and assess qualifying acquisitions.

In addition, we can speak to our contacts in the Research Collaboration Advice Team (RCAT) or seek general advice and support from the Investment Security Unit about the Act. Please contact RSO to do so.