UK national security and investment notifications rise, whilst government blocks just one acquisition

The fifth annual report published on the country’s NSIA regime showed that the government’s Investment Security Unit (ISU) received 1,324 notifications, a 16% increase on the previous reporting year. Nearly 96% of notifications required no further action, and so were cleared without conditions.

It comes as the UK government said it would be adapting its NSIA legislation to ensure it met the needs of an ‘increasingly interconnected economy’ as it looks to increase investment in sensitive parts of the economy.

Giles Warrington, a merger control and NSIA expert with Pinsent Masons, said the figures showed how full consideration of a transaction is required to assess screening risk.

“The UK's investment screening regime is maturing quickly,” he said. “Notifications are up year-on-year, clearance timelines for complex cases are lengthy, and the government is now moving to reshape the sectoral landscape with standalone categories for critical minerals, semiconductors and water.”

“The data also continues to challenge assumptions. It shows UK-headquartered acquirers accounted for over half of all call-ins and the majority of binding orders, highlighting that investor nationality is not the only factor when assessing national security risk, with the UK government also placing significant importance on the activities of the target,” said Warrington.

The annual report, which must be published under the NSIA, shows that just one acquisition in the last year – covering the period from 1 April 2025 to 31 March 2026 – was blocked by the UK government.

Acquisitions connected to China represented almost a third of those called-in by the ISU, with US acquirers representing 23% of call-ins. Five of the nine final orders involved acquirers associated with the UK, with Chinese-connected acquirers associated with three of the orders – down from seven orders in the previous year.

Defence industry acquisitions represented a significant number of the 60 call-in notices issued (47%), and military and dual-use acquisitions represented a third. Overall, 16 of the 17 sensitive sectors had at least one call-in issued. Whilst defence-related acquisitions accounted for the largest share of call-ins, the highest number of final orders were associated with the advanced materials and data infrastructure sectors – underlining the UK government’s continued focus on strategic technologies and critical digital assets.

In total, the government received 1,324 notifications – up 16% on the previous reporting period – with 1,135 of these made under the mandatory notification regime. Of the rest, 42 were retrospective applications, and the remainder made under the voluntary notification regime. All decisions on whether to call-in or clear notified acquisitions were taken within the statutory review period of 30 working days.

The ISU said it had not issued any penalties in the last reporting period, nor concluded any prosecutions – with parties required to provide reassurance steps for any breaches of the rules, to show that any infringing conduct would not be repeated. During the reporting period, 42 potential offences of completing a notifiable acquisition without approval had been identified, aligning with the 42 retrospective applications.

The report also confirmed that the government is looking to make changes to NSIA legislation in the near future, to react to ongoing global investment trends.

Paul Williams, a merger control and NSIA expert at Pinsent Masons, said: “Forthcoming legislation will exempt certain acquisitions from mandatory notification, update the scope of the notifiable sectors, and amend the forms that businesses use to notify acquisitions, providing businesses with further clarity on the UK NSIA regime."

Earlier this year, the government announced plans to refine the mandatory investment screening rules, including removing some AI deal notifications, while increasing requirements on critical infrastructure such as companies active in the water sector.

The government said it was committed to ensuring the NSIA legislation continued to support growth by facilitating investment in a way that protected UK national security, to ensure investors had the certainty they needed.

Williams warned that, with the changes in legislation on the horizon, it was important for firms to be ready for the accompanying changes to their notification obligations.

“With forthcoming legislation set to amend mandatory notification obligations, any business considering future transactions in sensitive sectors should be following developments closely,” he added.