National Security and Investment Act 2021

Part 2: Remedies

113. Part 2 of the Act is concerned with the remedies available to the Secretary of State to address risks to national security and the period in which such remedies are available.

Section 23: Meaning of "assessment period"

114. Section 23 provides for the time limits for the assessment of a trigger event after it has been called in. It provides that the Secretary of State has a period of 30 working days after a trigger event has been called-in to determine whether to issue a final order imposing remedies or a final notification confirming no further action is to be taken ("the initial period").
115. This period may be extended by the Secretary of State for a further 45 working days if they reasonably believe that a national security risk has arisen or would arise from the trigger event, and reasonably consider the extension is required to assess the trigger event further ("the additional period").
116. Extensions beyond 75 working days (the initial 30 day period plus the additional period of 45 working days) may be agreed between the acquirer and the Secretary of State if the Secretary of State is satisfied a national security risk has arisen or would arise from the trigger event, and reasonably considers a further period is required to consider whether to make a final order (see section 26) or what it should contain ("a voluntary period").

Section 24: Effect of information notice and attendance notice

117. Section 24 provides that, when calculating the assessment period under section 23, any period of time between the Secretary of State notifying the recipients of the call-in notice (see section 1) that an information notice (see section 19) or attendance notice (see section 20) has been issued, and the Secretary of State notifying those persons that either the requirements of the notice have been complied with or that the time allowed for compliance has passed, is to be discounted.

Section 25: Interim orders

118. Section 25 enables the Secretary of State, whilst a national security assessment is ongoing, to make an interim order for the purpose of preventing or reversing pre-emptive action or mitigating its effects. "Pre-emptive action" is defined as action which might prejudice the exercise of the Secretary of State’s functions under the Act in relation to call-in notices (see section 1), i.e., in relation to national security assessments. This would include for example actions which might prejudice the imposition of appropriate remedies as part of a final order under section 26. The Secretary of State may only make an interim order if they reasonably consider that the provisions of the order are necessary and proportionate for the permitted purposes.
119. Subsection (4) provides that an interim order may amongst other things include provision requiring persons to do, or not to do, particular things. An interim order may, for example, prohibit the parties to a trigger event in progress from completing the acquisition, or require that any existing integration is reversed.
120. Subsection (5) sets out the permitted extra-territorial application of interim orders. An interim order may only apply to a person’s conduct outside the UK or the territorial sea adjacent to the UK if they are: (a) a UK national; (b) an individual ordinarily resident in the UK; (c) a body incorporated or constituted under the law of any part of the UK; or (d) carrying on business in the UK.

Section 26: Final orders and final notifications

121. Section 26 provides for the Secretary of State’s final decision following a national security assessment. Before the end of the assessment period (see section 23), the Secretary of State must either notify the recipients of the call-in notice (see section 1) that no further action will be taken on the assessment under the Act, or, where he or she is satisfied that a trigger event has taken place or is in progress or contemplation, and that it has given rise to or would give rise to a national security risk, make a final order for the purpose of preventing, remedying or mitigating that risk. The Secretary of State may only make a final order if he or she reasonably considers that the provisions of the order are necessary and proportionate for the permitted purposes. Subsection (4) requires the Secretary of State to consider any representations made to him or her before making a final order.
122. Subsection (5) provides that a final order may amongst other things include provision requiring persons to do or not do particular things. A final order will be in force for the period specified in or under it, or until it is revoked (subsections (7) and (8)).
123. Subsection (6) sets out the permitted extra-territorial application of final orders. A final order may only apply to a person’s conduct outside the UK or the territorial sea adjacent to the UK if they are: (a) a UK national; (b) an individual ordinarily resident in the UK; (c) a body incorporated or constituted under the law of any part of the UK; or (d) carrying on business in the UK.

Section 27: Review, variation and revocation of orders

124. Section 27 requires the Secretary of State to keep interim orders and final orders under review, and to consider requests to vary or revoke them.

Section 28: Orders: supplementary

125. Section 28 makes provision for serving interim orders and final orders, and for serving notices that such an order has been varied or revoked. Orders, and varied orders, must be served on anyone who must comply with the order, the recipients of the call-in notice, and any other person the Secretary of State considers appropriate (for example, a regulator). The same persons must be given notice of the revocation of an order. In addition, notice that an order has been varied must be given to any person who was previously required to comply with the order but is no longer required to do so.
126. Subsection (4) prescribes the required contents of orders or accompanying explanatory material.

Section 29: Publication of notice of final order

127. Section 29 requires that, when the Secretary of State makes, varies or revokes a final order, he or she must publish notice of that fact. Subsection (2) prescribes the required contents of such notices.

Section 30: Financial assistance

128. Section 30 provides that the Secretary of State may, with the consent of the Treasury, give financial assistance to or in respect of an entity, through a loan, guarantee or indemnity or any other form of financial assistance. The financial assistance must be given as a consequence of him or her making a final order (see section 26).
129. If during any financial year the amount given under this section totals £100 million or more, the Secretary of State must lay a report of the amount before the House of Commons. Where during any financial year in which such a report has been laid the Secretary of State provides any further financial assistance under this section, he or she must lay a further report of the amount.

Section 31: Interaction with CMA functions under Part 3 of Enterprise Act 2002

130. Section 31 provides for situations where a trigger event considered under this Act for national security reasons is also subject to consideration by the CMA under the merger control regime in Part 3 of the Enterprise Act 2002. It gives the Secretary of State the power, if a final order is in force or a final notification has been given under this Act (see section 26), to direct the CMA to do, or not to do, anything under the merger control regime in relation to the trigger event. This power will allow the Secretary of State to ensure that, when a risk to national security has been addressed via a final order under the Act, the CMA does not inadvertently undermine this through any action it takes. The Secretary of State will also be able to use this power to ensure that a person is not subject to contradictory remedies under the two regimes.
131. Subsections (2) to (4) impose requirements for the use of this power, namely that the Secretary of State must reasonably consider that the direction is necessary and proportionate for the purpose of preventing, remedying or mitigating a risk to national security, that the CMA and such other persons as the Secretary of State considers appropriate must first be consulted, and that the Secretary of State’s direction must be published.