National Security and Investment Bill

Written evidence submitted by the Alternative Investment Management Association Limited (AIMA) (NSIB05)

Sir Graham Brady MP

Chairman, Public Bill Committee

House of Commons



Submitted via Electronic Submission to

Dear Sir Graham,

AIMA’s evidence to the Public Bill Committee on the National Security and Investment Bill

The Alternative Investment Management Association Limited (AIMA) [1] appreciates the opportunity to provide evidence to the Public Bill Committee on the National Security and Investment Bill (the ‘ NSI Bill ’) .

While we fully support the UK Government’s objective of safeguarding the interests of businesses and investors by scrutinising and intervening in business transactions only where that is required to protect national security, we believe the NSI Bill should be amended to ensure it is more focused and does not put in place inadvertent barriers that negatively impact the UK’s investment climate. In particular, we would urge the Public Bill Committee to take note of the following concerns and suggested amendments to the NSI Bill:

Scope of targets: We believe that the scope of the sectors that would be required to notify the Department for Business, Energy and Industrial Strategy (BEIS) on a mandatory basis should be more clearly and narrowly defined as the current wording and definition is overly ambiguous. In particular, this relates to the following sectors: energy, artificial intelligence, communications, machine learning, robotics and data infrastructure. The scope of the NSI Bill is also currently too broad with no general materiality threshold, and with only a small number of the sectors having sector-specific materiality thresholds. The UK Government can add additional sectors moving forward and it is, therefore, unnecessary that the NSI Bill has such an indiscriminate scope. In addition, the NSI Bill also introduces the concept of "national security" and notes that a transaction will be void - without the requirement to provide any reasoning as to why the transaction was problematic from a national security perspective - if it is in breach of the mandatory filing obligation. It would be helpful if BEIS can expand on its definition of "national security" as we fear that a lack of clarity on this concept might give rise to an expansive interpretation by future UK Governments to impose further restrictions on the basis of "national security". If there is no appetite to define "national security" it would be helpful at least to confirm that the concept does not include broader public, economic or national interest concerns.

Minimum thresholds and extra-territoriality: Considering the broad scope of the mandatory notification requirement - which captures the acquisition of a "material influence" or the acquisition/voting rights of 15% or more - and taking into consideration that the target entity does not need to have a minimum UK revenue threshold (or even a physical UK presence for the call-in power to apply), many foreign-to-foreign investment deals will be caught by the mandatory notification requirement (or the call-in power) as the NSI Bill would capture all legal entities that carry on business in the UK or (for the call-in power) make sales of goods or services into the UK. In effect, this would mean that a disproportionate amount of non-UK entities will need to file a notification (whether mandatory or voluntary) with BEIS on an almost continuous basis. We note that the extra-territorial scope of the NSI Bill is at odds with foreign direct investment (‘FDI’) regimes in other jurisdictions (e.g., France, Spain, Germany) where the target entity must be registered in that specific jurisdiction. These other FDI regimes do not catch transactions where the target is based in a different country and we believe the NSI Bill should only focus on targets registered in the UK.

Retroactivity covering investments prior to entry into force of the NIS Bill: As it is currently drafted, the legislative proposal would also capture investments/acquisitions that are currently in progress and which are expected to be completed from 12 November until entry into force of the NSI Bill if BEIS believes it would give risk to a risk to "national security". The Government argues that this retroactivity is necessary to prevent investors/acquirers taking advantage from the current regime. However, considering the Government has only started consulting on the definitions of the target sectors and there are already grey areas identified where further clarification is needed, it is wholly unfair to include these particular investments/acquisitions as investors and acquirers have not yet had the chance to fully consider the impact on their investment strategies in relation to investments in progress. The final, adopted law should only apply to transactions completed after live consultation processes related to the NSI Bill, including Parliamentary scrutiny, have been completed and it has received Royal Assent. The Government already has considerable scope to intervene in transactions on national security grounds after significantly reducing the thresholds in six sectors over the last two years.

In conclusion, we respectfully ask the Public Bill Committee to carefully consider the issues raised above to ensure the NSI Bill is effective, transparent and proportional to safeguard the interests of investors.

We would be happy to elaborate further on any of the points raised in this letter. If you have any questions about these comments, or if we can provide further information, please do not hesitate to contact Jennifer Wood, Managing Director, Global Head of Asset Management Regulation & Sound Practices, at +44 (0) 20 7822 8380 or

Yours sincerely,

Jiří Król

Deputy CEO, Global Head of Government Affairs


9 December 2020

[1] AIMA, the Alternative Investment Management Association, is the global representative of the alternative investment industry, with more than 1,900 corporate members in over 60 countries. AIMA’s fund manager members collectively manage more than $2 trillion in assets. AIMA draws upon the expertise and diversity of its membership to provide leadership in industry initiatives such as advocacy, policy and regulatory engagement, educational programmes and sound practice guides. AIMA works to raise media and public awareness of the value of the industry. AIMA set up the Alternative Credit Council (ACC) to help firms focused on the private credit and direct lending space. The ACC currently represents over 170 members that manage $400 billion of private credit assets globally. AIMA is committed to developing skills and education standards and is a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) – the first and only specialised educational standard for alternative investment specialists. AIMA is governed by its Council (Board of Directors). For further information, please visit AIMA’s website, .


Prepared 10th December 2020