applications for transactions that should have been reported under the NSI Act but were not. Thirty-seven notifications were rejected for several potential reasons including because they were filed as voluntary rather than mandatory. Of the notifications assessed during the Reporting Period, only 4.5% resulted in a “call- in” notice, indicating a need for further scrutiny, while the vast majority, 95.5%, received no further action notices. Among the acquisitions scrutinized after the initial review period, 36% were associated with the defense area of the economy, 29% were associated with the Military and Dual Use sector, and 27% with advanced materials – sectors that would be linked with national security issues on their face. During the Reporting Period, there were 35 final notifications (which includes four withdrawn notifications), whereby a transaction is cleared after being called in for assessment (Final Notification). The government assessed 52 called- in acquisitions during the Reporting Period, of which 67% resulted in a Final Notification. There were 17 final orders made, whereby the Secretary of State either approves a transaction subject to conditions, unwinds or blocks the transaction (Final Orders). This equates to almost 1.5% of the total notifications in the Reporting Period. One acquisition during the Reporting Period involved the blocking or unwinding of a transaction, although it is possible that one or more of the five withdrawn notifications would have been prohibited in the absence of such withdrawal. Of the notifications that were withdrawn, four followed mandatory notifications and one followed from a called-in acquisition for non- notified acquisitions. The reason for withdrawals is not reported. One acquisition during the Reporting Period was subject to an order to unwind. While remedies were imposed on transactions with both UK or U.S. acquirers, and the NSI Act does not inherently discriminate based on country of origin (meaning UK acquirers are also in scope), investments with links to China constituted 32% of the call- ins, although Chinese-related notifications
accounted for less than 2% of total notifications. This statistic highlights the UK government’s continued scrutiny of Chinese investments. Recent Enforcement Trends The government tends to impose behavioral rather than structural remedies. In the Reporting Period, of the 17 Final Orders, only one was blocked or subject to unwinding. The behavioral commitments imposed so far are similar to those imposed under the UK’s previous national security regime and can be grouped into the following categories: ^ Information security measures : The government restricted the sharing of information from the target company to the acquirer in, e.g., Trina Solar UK Investments Limited/AGR-Trina BF HoldCo Limited and Ligeance/Sichuan. The Final Order in Ligeance/Sichuan also specified security measures that would need to be in place. In University of Liverpool/Pinggao, the Final Order obliged the parties to implement controls to protect sensitive information, including intellectual property from unauthorized access. In ESCO Maritime Solutions Limited/Ultra PMES Limited, the Final Order required information security requirements, governance arrangements for sensitive information protection and the establishment of a security sub-committee for oversight of compliance with protection of sensitive information. In Balmoral Comtec Limited/Freudenberg Flow Technologies Limited, the parties were ordered to adhere to specific cyber security standards. ^ Maintenance of UK strategic capabilities: The parties were ordered to maintain the strategic capabilities in the UK in TAQA Transmission Holding LLC/Transmission Investment Holdings Limited and Nanjing/ IsotopX. In Exosens UK Limited/Centronic Limited, the Final Orders required the parties to maintain the target company’s site and
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