A foreign acquirer completing a transaction in the United Kingdom without submitting the required notification now faces the risk of the deal being unwound – regardless of whether it has already closed. The UK's investment screening regime has been significantly tightened, and the new notification obligations took effect in early 2025. International businesses that assumed pre-existing transactions fell outside the rules are discovering, often late, that they do not.
The United Kingdom's investment screening regime now requires mandatory notification for foreign investments crossing defined thresholds in sensitive sectors, with submissions due before completion. Affected transactions that proceed without clearance are legally void and may trigger enforcement action by the Investment Security Unit. The obligation applies to acquirers from all jurisdictions, including longstanding EU and US trading partners.
This alert sets out what changed, which businesses are affected, and the five immediate steps international investors must take to avoid enforcement exposure.
What changed – the regulatory development and its effective date
The UK's national security investment legislation, which sits within the broader body of UK investment legislation, consolidated and significantly expanded the government's power to scrutinise foreign transactions. The regime entered full operation in early 2022 but was substantially reinforced through updated guidance and expanded sector definitions that took practical effect from early 2025.
The core change is this: mandatory notification is now required for any acquisition that meets the shareholding or voting rights thresholds in a defined list of sensitive sectors. This is a suspensory obligation – the transaction cannot legally complete until clearance is granted or the review period expires without intervention. Previously, many acquirers treated notification as conditional or voluntary in certain circumstances. That position is no longer defensible.
The Investment Security Unit, operating under the authority of the Secretary of State, administers the regime. Decisions may be reviewed by the High Court (England and Wales) on judicial review grounds, and the Supreme Court serves as the final appellate authority on points of law. The Financial Conduct Authority (FCA) retains parallel jurisdiction where the target is a regulated financial entity, including those subject to securities offering or listing requirements.
For transactions involving publicly listed targets, the interaction with FCA disclosure obligations and prospectus requirements adds an additional compliance layer. Acquirers pursuing a securities offering or IPO route into a UK-listed target must coordinate investment screening timelines with listing requirements and disclosure obligations to avoid regulatory conflict.
For the banking and finance dimension of cross-border acquisitions in the UK, see our analysis of banking and finance law in the United Kingdom, which covers regulated entity acquisition and FCA change-of-control processes.
Who is affected – threshold criteria and business categories
Mandatory notification applies when a foreign investor acquires:
- More than 25% of shares or voting rights in a qualifying entity
- More than 50%, or more than 75%, in a qualifying entity (each threshold triggers a separate notification obligation)
- Voting rights sufficient to pass or block resolutions
- Material influence over the entity's policy or activities
A qualifying entity is one that carries on activities in the UK in one of the 17 sensitive sectors defined under investment legislation. Those sectors include advanced materials, artificial intelligence, civil nuclear, communications, computing hardware, critical suppliers to government, cryptographic authentication. Data infrastructure, defence, energy, military and dual-use technologies, quantum technologies, satellite and space technologies, synthetic biology, and transport.
The regime is not limited to majority acquisitions. A minority stake that grants the investor material influence over strategy or personnel is sufficient to trigger the obligation. This catches a range of transaction types that would not ordinarily be considered controlling investments – including investment fund participation structures, joint ventures, and staged acquisition mechanisms.
Importantly, the obligation applies regardless of the acquirer's nationality. Investors from EU member states, the United States, and other jurisdictions with close UK ties are not exempt. Companies House registration in the UK does not confer any preferential treatment. Similarly, HMRC-registered entities or those with existing UK tax residence do not benefit from a domestic carve-out.
Call-in powers – the government's ability to review transactions that were not mandatorily notifiable – extend back five years for national security cases and six months from the date the government becomes aware of a transaction. This means completed transactions are not automatically safe.
To receive an expert assessment of your transaction's notification obligations in the United Kingdom, contact us at info@ferrazwhitmore.com.
What to do now – immediate actions for international investors
International companies with existing or planned UK investments should treat the following as immediate priorities.
1. Screen your transaction against sector definitions. The 17 sensitive sectors are defined in technical terms. A technology or data-adjacent business that does not appear obviously defence-related may nonetheless fall within the AI, computing hardware, or data infrastructure categories. Conduct a sector mapping exercise before signing any heads of terms.
2. Assess all shareholding thresholds – not just majority control. If your proposed acquisition will cross the 25% threshold in a qualifying entity, mandatory notification applies. Review your transaction structure to identify whether staged acquisitions or convertible instruments will breach thresholds at a future date, as each threshold crossing is a separate notifiable event.
3. Review completed transactions within the look-back window. If your firm completed a UK acquisition in the past five years in a sensitive sector. Additionally. Notification was not filed, assess whether the Investment Security Unit's call-in powers could apply. A voluntary notification or legal opinion on the risk profile may reduce exposure.
4. Build screening timelines into deal structuring. The government has up to 30 working days to conduct an initial review following a mandatory notification. With the ability to extend to a full national security assessment lasting up to a further 45 working days. Deals closing on a fixed timeline that ignore this process risk either breach of the suspensory obligation or last-minute collapse. Lawyers in United Kingdom cross-border transactions increasingly treat screening as a Day 1 structural consideration, not a post-signing formality.
5. Co-ordinate with FCA and other regulators where the target is regulated. Where the target holds FCA authorisation, a prospectus is involved. Alternatively. An IPO or securities offering is underway, the investment screening process must run in parallel with FCA change-of-control approval. Failure to manage these timelines simultaneously can create legal deadlock. For further context on capital markets compliance in the UK, our capital markets practice in the United Kingdom covers the interaction between investment screening and securities regulation in detail.
For investors with parallel exposure in Portugal or other EU jurisdictions, our alert on investment screening developments in Portugal provides a comparative overview of the EU foreign direct investment screening regulation and its national implementation.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our capital markets and cross-border investment practice combines English common law expertise with Portuguese civil law tradition to support international investors navigating UK and EU regulatory regimes. As a law firm with deep United Kingdom practice coverage, we advise on investment screening, FCA-regulated transactions, securities offerings, IPO structures, and disclosure obligations. Our attorneys have acted in matters before the High Court and coordinated multi-jurisdictional regulatory submissions across 15 practice areas. Engaging a lawyer with United Kingdom investment screening experience at the earliest stage of a transaction materially reduces enforcement risk. To discuss your UK investment structure and notification obligations, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.
Author: Edward Whitmore
Author title: Senior Partner, Dispute Resolution
Published: February 19, 2026