12/18/2023 0 Comments Risk made in warsowThe NSIA significantly expanded the types of transactions covered by national security reviews to include acquisitions of voting rights and assets including land and intellectual property. The National Security and Investment Act 2021 (NSIA) came into force on 4 January 2022 giving the government broader powers to assess and intervene in investments and other acquisitions of control that may give rise to national security risks. The National Security and Investment Act 2021 The article considers where lenders still need to be wary of the NSIA implications and suggests how lenders and their advisers might limit NSIA risk in lending structures. In this article (first published in the Journal of International Banking and Financial Law 2022 Volume 37, Issue 9), Rebecca Oliver considers how the further market guidance published in July 2022 by the Department for Business, Energy and Industrial Strategy (BEIS) – which includes commentary on the application of the National Security and Investment Act 2021 (NSIA) to security arrangements – helps secured lenders. Lenders need to be alive to the need for careful due diligence when funding acquisitions of entities or assets where call-in powers may arise.Enforcing security over shares or assets where a national security risk exists, will trigger notification that will inevitably delay the process.Rights to exercise voting rights to secured shares following a loan default need to be drafted with care to keep lenders within the carve-outs available for preserving the value of, or enforcing, their security.Latest Department for Business, Energy and Industrial Strategy (BEIS) guidance confirms creation of share security will not trigger change of control tests unless it is title transfer security.
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