National Security and Investment Act 2021: what Japanese investors need to know about the current la

National Security and Investment Act 2021: what Japanese investors need to know about the current landscape of the UK’s FDI regime

Introduction

The National Security and Investment Act 2021 (NSIA or the Act) is the UK’s foreign direct investment (FDI) screening regime. Introduced in January 2022, it enables the UK Government to screen business transactions in certain ‘sensitive sectors’, or that may otherwise raise national security concerns. The regime applies to all investors, whether UK-based or overseas, and covers a broad range of transactions involving UK-connected businesses and assets.

On 14 July 2026 the UK Government published its annual report into the operation of the NSIA, providing valuable insight into trends in reporting and scrutiny. In light of that report, this is a good opportunity to review how the NSIA regime is working in practice and what Japanese investors should be aware of, and to look ahead to proposed reform to the regime.

Japanese investment into the UK is substantial, with Japanese FDI reaching £102 billion at the end of 2024. The UK-Japan relationship continues to deepen, including through the UK-Japan Comprehensive Economic Partnership and the recent UK-Japan Economic Security Partnership. In June 2026, the Japanese government announced an £18 billion investment entailing more than £9 billion on UK infrastructure and financial services, and up to £9 billion on UK offshore wind. Further cooperation increasingly focuses on high-growth and strategically sensitive areas, including life sciences, quantum technologies, advanced connectivity, energy and critical minerals. Many of these areas closely align with the sectors specified under the NSIA regime. As a result, Japanese investors are likely to encounter the regime in practice, and national security screening should form a routine part of transaction planning for UK-facing investments.

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Authors:

Kiyoshi Honda (Nagashima Ohno & Tsunematsu UK Limited, Partner)

Takeshi Matsuda (Nagashima Ohno & Tsunematsu UK Limited, Of Counsel and Special Advisor)

Kennosuke Muro (Nagashima Ohno & Tsunematsu UK Limited )

Will Widdess (TLT LLP, Legal Director)

Calum Ross (TLT LLP)