When does Mandatory Notification apply?

Certain acquisitions of shares in, or influence over, entities carrying on activities in sensitive areas of the economy require national security clearance before completion of the transaction. This requirement is likely to apply to aspects of the University’s commercialisation activities, including dealings in shares in spin-out companies.

Mandatory Notification requirement applies to ‘qualifying acquisitions of qualifying entities’.

Qualifying Entity | Definition

The definition of ‘qualifying entity’ includes UK or foreign companies, charitable bodies, trusts and other entities which are carrying on activities within one or more of seventeen designated sensitive sectors of the economy.

The seventeen designated sensitive sectors are:

Full details of the scope of each sector can be found in the Schedules to the Secretary of State's regulation.

The National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021

Qualifying Acquisition | Definition

The National Security and Investment Act 2021 (NSIA) defines a qualifying acquisition as the acquisition of a right or interest in, or in relation to, an entity where the level of control acquired meets any of the following thresholds:-

• The acquirer’s shareholding stake or voting rights in a qualifying entity meets or crosses certain percentage thresholds (for example: it increases from 25% or less to more than 25%; it increases from 50% or less to more than 50%; or it increases from less than 75% to 75% or more).

• The acquirer gains voting rights in a qualifying entity that allows it to pass or block resolutions governing the affairs of the entity.

• The acquirer is able to materially influence the policy of a qualifying entity, for example by acquiring the right to appoint members to the board of the entity, thereby enabling it to influence the strategic direction of the entity.

Mandatory Notifications

Mandatory Notifications are required to be made online by the acquirer (i.e. typically the partner, rather than the University itself).  Failure by an acquirer to make a mandatory notification renders the acquisition void and carries the potential for significant civil and criminal penalties.  Despite the fact that the obligation to notify falls on the acquirer, because the acquirer’s failure to notify will render the acquisition void, University colleagues have a clear incentive to work with acquiring partners to ensure that mandatory notifications are submitted timeously and in the prescribed form.

After the Mandatory Notification has been made, acquisitions will be assessed for risk of harm to national security and may be either cleared, made subject to conditions, or blocked.

Partners can access the Mandatory notification form, together with Government guidance on completing and registering it, here:

National Security and Investment notification service: mandatory, voluntary and retrospective forms | GOV.UK

The NSIA Online Notification Service can be found here:

Submit a National Security and Investment notification | GOV.UK

Further information

Government guidance on NSIA for the higher education and research intensive sectors provides a summary of the legislation, the relevant timescales and illustrates a series of acquisition scenarios: 

National Security and Investment Act: guidance for the higher education and research-intensive sectors - GOV.UK