Back in November 2023, the government issued a call for evidence in respect of the National Security and Investment Act 2021 (the NSI Act), seeking views on how the regime could provide national security protection while being more “business friendly”. The government's response has now been published, setting out that there will be five areas of focus between now and the autumn. 

1. An updated Section 3 Statement will be published next month. This is the statement that explains how the government decides whether to exercise its call-in power under the NSI Act. The responses make clear that stakeholders would value more clarity around the areas that the government perceives to be sensitive and how it goes about assessing the nature of any risk. However, a fast-track procedure which was suggested by some respondents, is not on the cards; the government's view is that each transaction needs to be considered on a case-by-case basis 
2. Updated market guidance will also be published next month covering specific topics which were raised by respondents and in particular, dealing with the application of the NSI Act to academia and Outward Direct Investment. Despite being suggested by a number of stakeholders, there will be no exemption for transfers of control which arise as a result of automatic enforcement provisions in secured finance agreements, although more guidance in relation to these transactions may be provided
3. A consultation about updating the 17 sensitive areas of the economy that fall within the NSI Act's mandatory notification requirements will be published by the summer. This may result in amendments and additions to the current list
4. Technical exemptions to the mandatory notification regime will be considered, although this will be subject to legislation being laid before Parliament in the autumn if time (and the General Election?) permit. Exemptions may include certain internal reorganisations; a sensible move in my opinion
5. Improvements to the actual NSI Act notification and review process will be considered. Areas for improvement suggested by respondents included better communication between the Investment Security Unit (the ISU) and parties involved in the notification process

The government's view has always been that although the regime would result in a significant number of notifications being made, only a few of those would result in a final order and the current statistics seem to bear this out. As at the date of the response, over 1700 notifications had been reviewed by the ISU, yet only 20 final orders had been made. While this is encouraging from a transactional point of view, it does suggest that, with a little thought, the system could be streamlined, so reducing the number of required notifications (especially those which are purely “technical”) which only serve to increase costs for the transactional parties and delay completions. Perhaps the call for evidence was just what was needed…