^ Shares or votes in a qualifying entity exceed 25%, 50% or 75%; ^ Voting rights that enable or prevent the passage of any class of resolution governing affairs of a qualifying entity; ^ Ability to “materially influence policy” of a qualifying entity; and ^ Ability to use a qualifying asset, or direct or control its use, ability to do so to a greater extent than prior to the acquisition. It is worth noting that indirect acquisitions of rights may also need to be notified. Further, qualifying acquisitions encompass internal corporate reorganizations that meet the above control thresholds, even where the ultimate beneficial owner remains the same. The 17 sensitive areas of the UK economy are the following: advanced materials, advanced robotics, artificial intelligence, civil nuclear, communications, computing hardware, critical suppliers to government, cryptographic authentication, data infrastructure, defense, energy, military and dual- use, quantum technologies, satellite and space technologies, suppliers to the emergency services, synthetic biology and transport. On March 12, 2026, the UK government confirmed a series of changes to the mandatory notification sectors, including the addition of water companies as a new mandatory notification sector, the creation of standalone categories for semiconductors and critical minerals (previously part of advanced materials), and the narrowing of the artificial intelligence sector definition to exclude “off-the-shelf” AI systems used for standard business tasks. These changes are to be implemented via secondary legislation to be laid before Parliament in 2026. Although the government has indicated that it intends to focus on UK-based entities and assets, the NSI Act has extraterritorial reach since it applies to any entity or asset that is connected to the UK through activities carried on in the country and to the supply of goods or services to local customers. The connecting factors that
may be considered when determining whether an overseas entity falls within the scope of the Act include but are not limited to local presence such as an office or branch; the supply of goods that are modified or used domestically; and carrying out research and development activities in the UK. Investigations into acquisitions of assets located outside the UK are expected to be rare, but the Act could apply to assets that are used in connection with the supply of goods or services to the UK and to the generation of energy or materials consumed domestically. Mandatory vs. Voluntary Notification Transactions must be notified pursuant to the mandatory notification regime where the shares or votes acquired by the acquirer in a “qualifying entity” exceed 25%, 50% or 75%; or confer the ability to pass or block resolutions governing its affairs and the entity is active in one or more of the 17 sensitive areas of the economy (“notifiable acquisitions”). A failure to seek approval for a notifiable acquisition before completion renders it automatically void. In addition, the acquirer and personnel of the acquirer may be subject to criminal and/or civil penalties for completing the transaction without first obtaining clearance. Parties are not legally required to notify the government about an acquisition if it is not covered by the mandatory notification regime. A voluntary notification can be submitted for acquisitions that fall outside the mandatory regime, including for acquisitions of qualifying assets (such as land, tangible property or intellectual property), acquisitions of material influence over an entity, and an acquisition of an entity that does not fall within the 17 sensitive areas, but which the government may reasonably suspect gives rise to a national security risk. The government provides the following framework for its assessment of national security risk: ^ Target risk: If the target company, the entity or asset being acquired, is being used, or could be used, in a way that raises a risk to the UK’s national security. This assessment may
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