Since its introdction as the Enterprise Act in 2002, only a few takeovers have been called into question. That’s all about to change, however, with the new National Security and Investment Act (NSIA) set to move that number to up to 1,800.

This could have cooling effect on business investment, critics say, as the the new legislation puts up new, unnecessary roadblocks to investment.

“The Government is attempting to find a small number of problematic deals, like needles in a haystack – but the haystack they’ve built for themselves could prove too big,” says Camilla de Coverly Veale, head of tech regulation at startup trade body the Coalition for a Digital Economy.

“There’s a real chance the regime is rapidly swamped with cases, creating delays that put deals at risk.”

The legislation comes in the wake of what has been arguably one of most controversial British takeover’s in recent year’s by way of the $40bn Nvidia takeover of British chip maker, ARM.

Britain’s tech startup scene has enjoyed a boon period over the last few years, largely as a result of foreign investment, with fears mounting that the NSIA will halt the flow of cash in British tech.

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The NSIA will apply scrutiny to any deal that grants an investor a stake of 25% or more in a company involved in one of 17 “sensitive areas of the economy”. That applies whether the deal is a takeover or a funding round, and is blind to where the investor is based.

While some categories of companies being considered under the act are intuitive enough, such as nuclear energy, space and transport, others are considered by critics as too broad – artificial intelligence, in particular.

“We’re going from a lightning strikes type approach where you’ve got to be pretty unlucky, statistically, to get an intervention notice from the Government, to a system where the Government wants to know about pretty much everything that’s going on in the economy,” says Nicole Kar, head of antitrust and foreign investment at law firm Linklaters.

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