Perspectives · Investment screening
The UK is redrawing the mandatory notification sectors
The government published its response on 12 March 2026 to the consultation on the National Security and Investment Act's Notifiable Acquisition Regulations, which ran from 22 July to 14 October 2025. The response confirms an intention to move from seventeen mandatory sectors to nineteen: water is added, semiconductors and critical minerals are taken out of advanced materials to stand on their own, computing hardware is folded into semiconductors, and the artificial intelligence definition is narrowed. None of that is law yet. The amending regulations are expected later in 2026 and the 2021 regulations remain in force until they are made. This perspective is general information, not legal advice.
16 March 2026 · Investment screening
The redraw
Three schedules in, one folded away
The response confirms the shape of the new schedules. Their final wording is still to come. Water becomes a mandatory sector in its own right. Semiconductors are carved out of advanced materials to stand alone, and the existing computing hardware schedule is folded into the new semiconductors schedule. Critical minerals are carved out of advanced materials too. Remove one schedule, add three, and the count goes from seventeen to nineteen.
The other direction is narrowing. The artificial intelligence schedule is to be drawn so that entities which build or modify AI systems remain in scope while end-users of those systems generally fall outside mandatory notification. Respondents had said the earlier drafting risked catching ordinary use of off-the-shelf products. Communications, critical minerals and semiconductors are being tightened as well, to capture less low-risk activity.
Not yet law
The 2021 regulations still decide
A consultation response is a statement of intent. The changes have to be made by secondary legislation, which the government expects to publish later in 2026, and the sector list moves only when those regulations come into force. Until then the Notifiable Acquisition (Specification of Qualifying Entities) Regulations 2021 apply exactly as they stand: seventeen sectors, computing hardware still its own schedule, and the current artificial intelligence definition.
That cuts both ways for a deal team. An acquisition completing this year is tested against the schedules in force on the day it completes. An acquirer who assumes the narrowing already applies, and treats a target that merely uses an AI system as out of scope, may complete a notifiable acquisition without approval. Completing without approval makes the acquisition void, with penalties available on top.
Two facts, one entity
What the entity does, and how much of it you hold
Mandatory notification turns on two facts about one legal entity. The first is the activity it carries on, tested against the schedule wording. The second is the level of control acquired, and the thresholds are fixed: from 25 per cent or less to more than 25 per cent, from 50 per cent or less to more than 50 per cent, from below 75 per cent to 75 per cent or more, or acquiring voting rights that let the holder pass or block resolutions governing the entity.
One company usually has both facts to hand. A fund or holding group does not. The target is one entity in a chain, an existing stake may be held through more than one vehicle, and a modest follow-on subscription can push an aggregate holding across a threshold nobody was watching. The description of what the entity actually does often lives in an investment paper and never reaches the corporate record.
So write the activity down before a deal needs it: a short, honest description of what each entity does, good enough that someone who was not on the deal can test it against a schedule. Beside it, state the current ownership as exact percentages. The words "majority" and "wholly owned" cannot be compared with a numeric threshold. Give both a named owner and a date, because when the amending regulations are made somebody has to read the new schedules against the activity descriptions and mark which entities have moved in or out.
In Alethia
Two facts, one record, both dated
Each entity in the register carries its own descriptive record, and ownership is held as recorded percentages between holders and entities. A structure chart is drawn from the register, so the chart and the percentages cannot drift apart. Officers, documents, bank accounts and mandates hang off the same entity record.
Alethia does not notify anyone or file anything on a customer's behalf. It holds both facts the test needs in one place, each carrying a date: a compliance obligation with a due date schedules a review of activity descriptions when a schedule changes, and the audit trail shows when an ownership percentage last moved and who recorded it. When the amending regulations are made, the question of which entities have moved into scope becomes a report against the register, answered the same afternoon.
Questions
The proposed sector changes
Did the sector list change on 12 March 2026?
No. That was the date the government published its response to the consultation. The sector list changes only when amending regulations are made, which is expected later in 2026. Until then the 2021 regulations apply unchanged.
Does the artificial intelligence narrowing mean a portfolio company that uses AI tools is outside the regime?
The response confirms an intention to draw the schedule so that entities building or modifying AI systems are in scope and end-users generally are not. It is an intention, and not yet a rule. The answer for any particular entity will depend on the wording of the amending regulations when they appear.
If the schedules are being narrowed, is there less to do?
Not for the entities affected by the additions. Water becomes a mandatory sector, and semiconductors and critical minerals become standalone sectors with their own definitions. A group holding water, minerals or hardware assets should expect more of its transactions to be caught.
Two facts, written down before the deal
Mandatory notification asks what the entity does and how much of it you are acquiring. Keep the activity description and the exact ownership percentage current in the register, so a change of schedules can be worked through in an afternoon.