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

Made: 10th November 2021

Coming into force: 4th January 2022

In accordance with section 63(5) of that Act, a draft of this instrument was laid before Parliament and approved by a resolution of each House of Parliament.

Citation, commencement and extent

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• (1) These Regulations may be cited as the National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021.

• (2) These Regulations come into force on 4th January 2022.

• (3) These Regulations extend to England and Wales, Scotland and Northern Ireland.

Notifiable acquisitions

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• (1) Schedules 1 to 17 specify descriptions of qualifying entity for the purposes of section 6(2) of the National Security and Investment Act 2021 (notifiable acquisitions).

• (2) A qualifying entity falls within a description in the Schedules by reason of the carrying on of an activity specified in the Schedules only if it carries on the activity in the United Kingdom.

Interpretation

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In these Regulations—

• “the Act” means the National Security and Investment Act 2021;

• “development” means all stages prior to production, including design, design research, design analyses, design concepts, assembly and testing of prototypes, pilot production schemes, design data, process of transforming design data into goods or software, configuration design, integration design, layouts;

• “production” means all production stages, including product engineering, manufacture, integration, assembly (mounting), inspection, testing and quality assurance.

Review

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• (1) The Secretary of State must from time to time—

• (a) carry out a review of the regulatory provision contained in these Regulations; and

• (b) publish a report setting out the conclusion of the review.

• (2) The first report must be published before the end of the period of three years beginning with the day on which these Regulations come into force for any purpose.

• (3) Subsequent reports must be published at intervals not exceeding three years.

• (4) Section 30(4) of the Small Business, Enterprise and Employment Act 2015[^f00002] requires that a report published under this regulation must, in particular—

• (a) set out the objectives intended to be achieved by the regulatory provision referred to in paragraph (1)(a);

• (b) assess the extent to which those objectives are achieved;

• (c) assess whether those objectives remain appropriate; and

• (d) if those objectives remain appropriate, assess the extent to which they could be achieved in another way which involves less onerous regulatory provision.

• (5) In this regulation, “regulatory provision” has the same meaning as in sections 28 to 32 of the Small Business, Enterprise and Employment Act 2015 (see section 32 of that Act).

SCHEDULE 1 — Advanced materials

Interpretation

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In this Schedule—

• “2D” means two-dimensional;

• “3D” means three-dimensional;

• “advanced composites” relates to structural composite materials with either metallic or ceramic matrices and includes 3D reinforcing architectures for any matrix (polymer, metal or ceramic);

• “advanced materials” means completely new materials and materials that are developments on traditional materials, where such materials provide any of the following—targeted properties;advantageous properties;outstanding structural properties; oroutstanding functional properties;

• “enabler” means any material or process which is not a material described in paragraph 2(3) or 3 but is used in the manufacture or application of such materials;

• “fabrication” in sector (7) (semiconductors) of the table set out in paragraph 3 means the process of producing a microelectronic circuit on a semiconductor substrate or using other advanced materials;

• “graphene and related 2D” are those materials with attributes as defined within ISO/TS 80004-13:2017[^f00003];

• “metamaterial”—means a composite material in which the constituents are designed and spatially arranged through a rational design-led approach to change the manner in which electromagnetic, acoustic or vibrational energy interacts with the material, in order to achieve a property or performance that is not possible naturally and includes a metasurface and for this purpose “composite material” means a solid material formed from two or more constituents and “constituent” includes a region containing a vacuum, gas or liquid;does not include the types of composite materials the advanced composites described in paragraph 5 and composites or coatings containing pigments or fillers that are mixed in or blended into a binder material where both of these types of composite materials can be a constituent from which a metamaterial may be formed;

• “metasurface” means a two-dimensional form of metamaterial which includes one or more layers of material that are intentionally patterned or textured (irrespective of whether they are periodic or not) through a rational design-led approach;

• “nanotechnology” means the manipulation and control of matter predominantly in the nanoscale to make use of size-and-structure-dependent properties and phenomena distinct from those associated with individual atoms or molecules, or extrapolation from larger sizes of the same material (where “manipulation and control” includes material synthesis in relation to nanotechnology) with current or potential utility for defence, including nanomaterials, nanodevices, nanocomponents and nanosystems (including nanomachines) in accordance with ISO/TR 10993-22:2017[^f00004];

• “nanomaterials” means materials with any external dimension in the nanoscale or having internal structure or surface structure in the nanoscale and include nano-objects, dispersions or mixtures containing nano-objects, and nanostructured material (including structuring at an interface between materials, including air, and within a material) in accordance with ISO/TR 10993-22:2017;

• “packaging” in sector (7) (semiconductors) of the table set out in paragraph 3 means the process of turning a microelectronic circuit on an appropriate substrate into a package suitable for use in an electronic circuit but does not include the assembly and packaging of chips and devices into circuit boards;

• “photonic and optoelectronic materials and devices” in sector (8) of the table set out in paragraph 3 relate to high power lasers that are characterised by a combination of power at the output apertures (values of 1 kilowatt and above), beam quality (M² of less than 1.2), intended operating ranges (greater than 1 kilometre) and at wavelengths compatible with propagation over those distances (typically 1 micrometre to 2 micrometres wavelengths);

• “semiconductor” means—semiconductors used to form radio frequency and microwave devices;semiconductors used to realise imaging sensor arrays;the accessibility of design and production for semiconductor devices and chips where “chips” include Field Programmable Gate Array devices, System on Chip, Application Specific Integrated Circuits and Readout Integrated Circuits and where “devices” includes radio and microwave frequency control circuitry, power amplifiers, low noise amplifiers and monolithic microwave integrated circuits and detectors;

• “technical textiles” means textiles (and their processes and enablers) specifically developed for their functional performance including additional functionality (such as integrated computing, processing or data transmission), 3D architectures, protection against blast and ballistic events but does not include sportswear or clothing that is ordinarily available to consumers or household goods.

Activities

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• (1) A qualifying entity carrying on activities that consist of or include any of the activities set out in sub-paragraph (2) in relation to—

• (a) any of the matters described in sub-paragraph (3); or

• (b) any of the matters described in relation to the sectors set out in paragraph 3.

• (2) The activities referred to in sub-paragraph (1) are—

• (a) research;

• (b) development or production;

• (c) development or production of anything designed as an enabler;

• (d) development or production of anything designed to be used for the purpose of production;

• (e) the provision of qualified or certified designs, materials, parts or products;

• (f) owning, creating, supplying or exploiting intellectual property;

• (g) provision of know-how or services of enablers;

• (h) recycling or re-using.

• (3) The matters referred to in sub-paragraph (1)(a) are materials, the export or transfer of which is controlled by virtue of their being specified in—

• (a) Schedule 2 to the Export Control Order 2008[^f00005]; or

• (b) Annex I and Annex IV to Council Regulation (EC) No 2009/428 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items[^f00006].

Sectors and matters

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The following Table sets out the sectors and matters referred to in paragraph 2(1)(b).