The UK’s Investment Security Unit (the ISU) has been steadily building its enforcement capability, and the results are becoming visible in deal activity across a range of sectors. The ISU is the UK enforcement authority responsible for reviewing notifications and taking enforcement action under the UK’s National Security and Investment Act 2021 (the NSIA).
Notification volumes have increased since late 2025, and the regime now appears to be becoming more interventionist when transactions are called in. For instance, the UK government recently blocked a merger transaction under the NSIA.[1] The geopolitical environment continues to influence UK foreign investment policy, and in-house teams with active mergers and acquisitions pipelines touching any of the 17 mandatory notification sectors may wish to ensure they have an up-to-date understanding of the evolving landscape.
Key Developments
- The first outright “block” under the NSIA has now been issued. The UK government blocked the proposed acquisition of a UK company on national security grounds, marking the first time the prohibition power has been exercised since the NSIA came into force.[2] The transaction involved a Chinese acquirer seeking control of a UK business with activities considered sensitive to critical national infrastructure, government, and UK emergency services. The decision is notable for transactions involving a target with communications infrastructure or technology exposure and an acquirer with connections to certain jurisdictions of concern.
- Call-in activity extends beyond mandatory notification cases. The ISU has called in transactions that fall outside the mandatory notification perimeter, including deals that were not notified at all. The absence of a mandatory notification obligation should not be read as confirmation that a transaction is without risk. The government’s five-year retrospective call-in power for non-notified transactions continues to apply in full.
- Target businesses in a handful of sectors are attracting attention consistently. Policy statements from the Department for Business and Trade, together with the Science and Technology Framework, indicate that advanced computing, AI infrastructure, and semiconductor supply chain businesses are treated as strategically sensitive. More generally, interventions made under the NSIA show the government consistently focusing on advanced technologies, dual‑use materials, data‑rich infrastructures, and acquirers linked to strategic competitor states.
- Conditions attached to clearances are substantive and ongoing. A number of recently cleared transactions have been subject to binding commitments covering personnel vetting, data segregation, board composition, and information barrier requirements. These are not cosmetic undertakings — they create continuing operational obligations that may require management after closing.
- Indirect acquisitions and restructurings continue to be examined. The ISU has shown a willingness to look carefully at joint ventures, licensing arrangements, debt-to-equity conversions, and other structures that may result in the acquisition of a qualifying interest or control. Economic substance and practical effect, rather than legal form alone, appear to inform the analysis.
- Coordination of filings across jurisdictions may be beneficial. Given parallel foreign direct investment (FDI) regimes in jurisdictions like the United States, the European Union, Canada, and Australia, a joined-up filing strategy may be worth considering from the outset of any multi-jurisdictional transaction. As with merger control review, regulators may look to how their peer agencies in other jurisdictions assess transactions, and concerns raised by a regulator in one jurisdiction may also have a bearing on the treatment of a transaction in other jurisdictions.
- NSIA analysis may be most useful when it begins early. The ISU initial review period — up to 30 working days — may need to be reflected in deal timetables from the term sheet stage, while also factoring in that the review may take longer if the transaction is “called in.” Incorporating NSIA screening into standard deal checklists, alongside other regulatory filing assessments, may help mitigate timetable pressure later in the process.
- The voluntary notification decision deserves careful thought. For transactions outside the mandatory sectors, the question is not simply whether to notify, but whether the call-in risk over a five-year window makes early voluntary notification the more prudent course. That assessment may benefit from a review of the target’s activities, the acquirer’s ownership and ultimate beneficial control, and any government contracts or sensitive data held by the target.
- Existing final orders require active compliance management. Conditions imposed by the ISU in a final order are legal obligations, and breach carries consequences, including the potential for fines and criminal sanctions on individuals. Businesses operating under a final order from a prior transaction may wish to review the compliance framework around it with the same rigour applied to other regulatory obligations.
- Businesses may wish to keep NSIA and merger control workstreams coordinated but distinct. In multi-jurisdictional transactions, the sequencing of filings across NSIA, Competition and Markets Authority, and other FDI and merger control regimes requires deliberate planning. NSIA clearance does not follow from merger control clearance, and the two processes will not always run in parallel without management.
Practical Considerations
Conclusion
The recent prohibition decision in the UK has removed some stakeholders’ ambiguity about the UK government’s willingness to use the full range of powers available under the NSIA. With prohibition now a demonstrated reality and call-in activity continuing to be a factor, stakeholders may wish to handle compliance with the NSIA upfront and as part of a standard checklist.
[1]UK investment screening: Balancing national security and economic growth - POST
[2]Acquisition of TTG Global Solutions Group Limited by Shenzhen HYT Science & Technology Co., Ltd - GOV.UK. The UK government has also previously issued a divestment order requiring the unwinding of a transaction which predated the Act coming into force. See: Acquisition of 80.2% of shares in Future Technology Devices International Limited by FTDI Holding Limited: notice of final order - GOV.UK