The UK Government published its latest annual report on the UK national security regime under the National Security and Investment Act 2021 (NSI Act) on 14 July 2026. Covering the period from 1 April 2025 to 31 March 2026, the most eye-catching point is another annual increase in the number of transactions notified and reviewed – with notifications now exceeding 1,300 per year, reinforcing existing concerns the regime may be too broad and causing delay in the start of reviews.

Also notable is that the number of final orders – imposed where a deal needs to be remedied or prohibited – was half that for the previous period (nine compared to 17 last year), although final orders tend to fluctuate and only a small proportion of reviews ever end in a final order.

The Government is continuing to be lenient where parties complete a deal without required mandatory approval – an offence risking sanctions and leaving a transaction void until retrospectively approved. 42 such potential offences were identified during the period, but no penalties imposed – parties providing reassurance they had taken steps to prevent future non-compliance was deemed sufficient.

Number of notifications and timing

1,324 notifications were submitted during the 2025-26 reporting period – a 15 percent increase on 2024-25, and 46 percent more than 2023-24.[1] This is mainly due to a higher number of mandatory notifications (although voluntary notifications also increased), so appears to be driven by M&A parties entering into more transactions falling within the mandatory regime (or possibly more parties realising their deals are caught) – the regime itself has not changed. 

The Government acknowledges this increase is lengthening the time the Investment Security Unit (ISU) takes to accept notifications and start reviews – now 11 working days on average to accept a mandatory notification, 13 for voluntary notifications and ten for retrospective validations (up from seven, eight and six working days respectively last year). 

Once a notification is accepted, the decision on whether to grant unconditional clearance at the first review stage or call in the transaction for an in-depth full assessment must be made within 30 working days. Decisions to call in are generally continuing to take the full time – 29 working days on average for mandatory notifications and 30 for voluntary notifications (this was 29 for both last year).

The Government has at least said it is “taking steps” to reduce the time taken to accept notifications – presumably by adding resource. While the Government also plans to make legislative changes to the regime (revising the mandatory sector definitions and introducing new exemptions from the mandatory notification requirements for at least some types of intra-group arrangements and appointing liquidators, special administrators and official receivers), these changes are not expected to materially reduce the number of reviews (read more about those changes here). 

Few reviews raise substantive concerns

95.6 percent of notified transactions are cleared unconditionally at the first review stage (this was 95.5 percent last year) – arguably suggesting too many unproblematic deals are being reviewed.  The Government seems unconcerned about this, which is interesting given its desire to encourage inward investment and recent focus on ensuring the Competition and Markets Authority’s (CMA) competition-based merger control regime helps to support (not discourage) growth and investment. However, national security is different – keeping the British people safe is the Government’s first duty, and an NSI Act review is generally much less onerous for parties than a CMA review. A high clearance rate at the first review stage was also the expectation from the outset.[2]  

Even most of the transactions called in for a full assessment are cleared unconditionally by way of a final notification, as opposed to remedied or prohibited under a final order – 44 transactions received a final notification during the reporting period (compared to 35 last year), although four were for deals abandoned during the full assessment stage, so potentially could have received a final order instead if not abandoned (this was five last year).  

Only nine final orders were issued during the reporting period (down from 17 last time) – eight granting conditional clearance and one prohibition. Three of the final orders were for non-notified transactions – so significant substantive concerns were found regarding half the six non-notified transactions reviewed during the period (compared to one final order for a non-notified transaction last year). Two final orders were for transactions where parties submitted a retrospective validation application after failing a make a required mandatory notification, three followed a mandatory notification and one was for a transaction voluntarily notified. 

Origin of investment

The UK is generally the most common origin of investment for all metrics reported – including transactions called in for a full assessment and final orders. However, this is because the reported data includes the location of immediate acquirers (often UK companies) as well as beneficial owners, and some transactions have both UK and foreign acquirers. Also, the regime catches entirely UK transactions (i.e. where an acquirer is not foreign owned), even though these are highly unlikely to raise concerns.

Excluding the UK, the most common origin of investment for deals resulting in a final order during the reporting period was China (three final orders), followed by Germany and the US (both two), while Russia was the origin of investment for one final order, and other examples with one each include Canada and Jersey. This provides a reminder that a final order may be needed even if an acquirer is from a “friendly” state if there are particular sensitivities about the target (albeit clearance with remedies is generally more likely than prohibition in such a scenario). 

Data on sectors

The annual report also includes data on the most common sectors regarding deals reviewed. Defence was the top sector for all the key metrics reported last year, which also applies this year except for final orders where the top three are Advanced Materials (five final orders), Data Infrastructure (three) and Military and Dual-Use (two), with Defence one of five sectors that were each relevant to one final order (whereas nine final orders last year related to Defence).

One of this year’s final orders concerned Manufacturing – not a mandatory notification sector.  Transactions can concern multiple sectors (hence why the above numbers for final orders by sector total more than this year’s nine final orders), so possibly that transaction may also have been in or related to one of the mandatory sectors. However, a transaction can receive a final order even if not in or related to a mandatory sector.

What does the future hold?

Since the annual report was published, we have had a change in Prime Minister and related changes to the “machinery of government” announced – which include the ISU (which operates the NSI Act regime on a day-to-day basis) moving from the Cabinet Office to the new Department for Business, Innovation, Science and Trade (BIST). This means NSI Act decisions will be taken by the new Secretary of State for BIST – Jonathan Reynolds MP – following this move, rather than the Chancellor of the Duchy of Lancaster (as has applied during the ISU’s time within the Cabinet Office). However, we do not believe this will cause a noticeable change in how the regime is operated.

Parties to deals are likely to see a greater impact from the proposed legislative reforms revising the mandatory notification sectors and introducing certain limited exemptions – reforms we still expect to proceed despite the above changes, especially as they have been under consideration for several years (first mooted prior to the 2024 General Election). Earlier this year, the Government’s response to its consultation on how it proposes to change the sector definitions suggested the required secondary legislation would be laid before Parliament during 2026.