The House of Commons Business and Trade Sub-Committee on National Security and Investment is of the view that the National Security and Investment Act 2021 (NSI Act) does not go far enough in the screening of foreign investment in UK companies. Last week, the sub-committee announced that the NSI Act is “not keeping pace” with the threats to the UK's economic security. It referred to the imposition of new, tougher investment rules in both the EU and US and suggested that we should follow in such jurisdictions' footsteps, perhaps by implementing controls over threats to media freedom (currently in place in, for example, the EU and Australia). In addition, the sub-committee pointed out that there is no actual definition of “national security” in the NSI Act; an issue that has been widely commented upon since the draft legislation was first published, implying that this is the reason for (in the sub-committee's view) the high number of notifications made to the government under the NSI Act in 2022/23. Such high number of notifications risk the government “losing sight of the wood for the trees and missing key transactions with security implications”.

The sub-committee's comments formed its reply to the government's recent call for evidence seeking views on the operation and scope of the NSI Act, with a particular focus on how the regime could be made “even more business friendly". Based on the opinion pieces and articles about the call for evidence that I've read so far, the majority seem to approve this sentiment, suggesting that some restricting of the mandatory notification requirements (the regime under the NSI Act which makes notification of certain transactions in certain sectors compulsory) would be applauded; for many, the requirements as currently legislated result in too many, no- risk transactions having to undergo the notification and clearance process. Perhaps a definition of “national security” would help here after all?

The government is currently reviewing the various replies to the call for evidence and we await its response but I suspect that this is a subject where you just can't please everybody.