NSIA (report) No. 5

Busier than ever, but no less selective: the fifth National Security and Investment Act 2021 (NSIA) annual report for the period from 1 April 2025 to 31 March 2026 shows the ISU is handling record volume of notifications, while interventions remain low.

The what and the who

Of the 1,220 notified acquisitions reviewed in the period (a marked increase from last year’s 1,079), just 4.4% (54) were called in – consistent with 4.5% the previous year, showing a continuous trend of the ISU seeking to focus in on transactions of critical importance. The ISU also used its powers to call in 6 non-notified acquisitions following market monitoring. 

The same three sensitive sectors continued to dominate at every stage of the process. Defence accounted for 58% of all notifications, followed by Military & Dual-Use (23%) and Critical Suppliers to Government (20%) and that pattern held for call-ins too: Defence led again (47%), with Critical Suppliers to Government and Military & Dual-Use tied at 33% each. It is perhaps unsurprising that notifications relating to Defence and Military continued to dominate, given this year’s record-breaking VC investment into the sectors, according to Crunchbase.

UK-associated acquirers remained the largest source of accepted notifications (72%), ahead of the US (28%), followed by France and Luxembourg (6% each). Acquirers associated with China do not feature among the largest sources of notifications themselves but, as with last year, they are disproportionately represented at the call-in, final notifications and final orders stages (accounting for 30% of all call-ins, 32% of final notifications and 33% of final orders), second only to the UK at each stage.

Only nine final orders were made (nearly half of last year’s 17), with transactions in the Advanced Materials sector taking the top spot (five orders), ahead of Data Infrastructure (three) and Military & Dual-Use (two), and in only four cases did transactions abort after they were called-in. Notably, only one transaction was blocked completely – 0.08% of all reviewed notifications. The remaining 8 were permitted to proceed under certain conditions. 

Logistics

While all mandatory notifications were cleared or called in within the 30 statutory working day period, the median number of working days from submission of a notification to acceptance increased yet again by over 50% from 7 working days to 11 working days. This is naturally inevitable as more transactions are notified, but this additional week’s wait should be factored into deal timelines. 

The horizon draws ever closer

The Government has reiterated its intention to lay secondary legislation before Parliament to introduce updates to the mandatory notification regime to provide greater clarity to businesses, following its 12-week consultation as commented on by my colleagues back in March 2026 (see post here). Refinement of the sensitive sectors will help keep lower risk deals (e.g., in the AI and Communications sectors) flowing and the introduction of a carve-out for internal group reorganisations will, I’m sure, be most welcome not only to large corporate groups, but to the ISU as it hopes to free up capacity to speed up acceptance times, and to acquirers keen to get the 30 working day clock ticking sooner rather than later.