FDI approval conditions

Under the new legislation, BEIS may block or impose conditions on deals.

By Tom D. Evans, Jonathan Parker, David J. Walker, Stephanie Adams, and Catherine Campbell

The UK’s National Security and Investment Act (NSI Act), is now officially in force, granting powers to the Secretary of State for Business, Energy and Industrial Strategy (BEIS) to screen a broad range of transactions on national security grounds, allowing BEIS to block or impose conditions on deals. Due to its retroactive application, the NSI Act is already impacting deals.

The NSI Act arrives at a time of heightened scrutiny of foreign direct investments (FDIs) across Europe. According to the latest edition of Latham & Watkins’ Private Equity Market Study, the prevalence of FDI approval conditions in deals continues to grow, reflective of the increased number of jurisdictions with FDI approval regimes and the high value, high profile, and strategically significant nature of the deals surveyed. With the advent of the NSI Act, we anticipate that this trend will continue, bringing new considerations and challenges to deals.