National Security and Investment Act: Statement for the Purposes of Section 3

Tuesday 21st May 2024 Written Statements

[The Chancellor of the Duchy of Lancaster and Secretary of State in the Cabinet Office (Oliver Dowden)]

On 18 April I published the Government’s response to the national security and investment call for evidence, which sought feedback from stakeholders on how the Government can increase understanding of the National Security and Investment Act 2021 and the risks it seeks to address. As part of the Government’s response, I committed to publishing an updated section 3 statement setting out the factors I expect to take into account when exercising the call-in power under the NSI Act. I also committed to publish further guidance on a range of topics to help stakeholders understand how the Act works.

Today I have fulfilled both of those commitments by laying an amended section 3 statement before Parliament and publishing updates to the extensive market guidance the Government have published on www.gov.uk.

The previous version of the section 3 statement was published in November 2021, ahead of the NSI Act’s commencement. While this updated version has a high degree of continuity with the previous version, several key changes have been made to better explain how the Secretary of State has used, and will continue to use, the Act’s powers.

These changes include further information on the approach the Government take to assessing risk in relation to:

Trigger events—including the circumstances in which certain acquisitions could be considered under the NSI Act, including the incorporation of new entities, formation of joint ventures, and outward direct investment.

The targets of acquisitions—including how the Government may consider technology transfer risks when reviewing asset acquisitions.

Acquirers—including where the Government may see risk from UK acquirers or acquirers that have previously been cleared through the NSI system.

The control being acquired—including how the Government may consider control risk in cases involving passive and non-controlling investments.

How decisions are made—including improved examples of how the Government assesses target risk, acquirer risk and control risk.

Today I have also updated the guidance for the NSI system, which is published on www.gov.uk. This includes additional guidance for higher education institutions as well as new guidance on how the Act can apply to outward direct investment and how statutory timelines are calculated. A full summary of the changes is available on www.gov.uk.

I will place a copy of the updated NSI statement for the purposes of section 3 in the Libraries of both Houses.

[HCWS490]