The Government has published a paper titled “The UK’s Modern Industrial Strategy”, in which it has set out its vision for the development of the UK economy and its industries.

Although a mission statement for the UK as a whole, the paper focuses on eight core industries which the Government considers important to the UK’s future: advanced manufacturing, the creative industries, life sciences, clean energy, defence, the digital and technologies economy, professional and business services, and financial services.

The paper sets out a range of proposed reforms, many of which will require new legislation. The key proposals from a corporate law perspective are as follows.

National security and investment

The Government intends to consult on updating the scope of the 17 “sensitive sectors” of the economy in which notification is mandatory under the National Security and Investment Act 2021. The aim is to ensure requirements remain targeted and proportionate.

These steps follow the Government’s November 2023 call for evidence on the regime and its subsequent review, following which it published its findings in December 2024. It concluded that the regime was achieving its objective, but that a small number of potential improvements could be made.

You can read more about the Government’s review of mandatory notifications under the UK’s national security and investment regime in our previous Corporate Law Update.

Under the Act, a buyer looking to make certain types of acquisitions of shares in a business that operates in a sensitive sector must notify the Government and obtain clearance before making the acquisition. Failure to do so is a criminal offence and results in the acquisition being null and void unless and until retrospective clearance is obtained.

The 17 sensitive sectors and their extent are set out in the National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021 (usually referred to simply as the Notifiable Acquisition Regulations).

In many cases, such as “defence” and “advanced materials”, the scope of a sector is very broad and can result in transactions requiring a mandatory notification where the risk to national security is theoretical or remote.

Any changes that make the perimeter of the sensitive sectors clearer are therefore welcome, as is additional guidance on how those sector definitions apply in practice.

The Government will also announce new exemptions to the mandatory notification regime.

Currently, mandatory notification is required even in some situations where there is no ultimate change in control, such as on an intra-group transfer or reorganisation, often resulting in unnecessary administration.

Similarly, there has been general support for extending technical exemptions to insolvency scenarios beyond administration (such as liquidation and receivership) and to Scots law share pledges.

Although requiring changes to the Act itself, we would hope to see sensibly crafted exemptions to remove these scenarios from the mandatory regime.

Capital markets

The paper promises further reforms to the UK’s capital markets, principally around pension fund investment. This builds on the recent overhaul to the UK’s listing regime (which took effect in July 2024) and the creation of the new PISCES trading sandbox.

To this end, the Government will publish a Financial Services Sector Plan.

You can:

• read more about the UK’s new listing rules regime in our previous in-depth piece; and 
• read more about the new PISCES private company share trading framework in our previous Corporate Law Update.

Deregulation

The Government intends to streamline regulation to “break down unnecessary barriers” and “open up opportunities for high-potential firms”. This includes merging regulators where it “makes sense to do so” and setting up a new unit to challenge unnecessary regulation.

The paper also proposes to simplify non-financial reporting (NFR) requirements for UK companies.

The Government has previously consulted on streamlining the UK’s NFR framework and has already implemented certain changes. These include uplifting the company size thresholds in December 2024 to remove the more burdensome elements of NFR for SMEs.

You can:

• read more about the Government’s principal proposals for streamlining non-financial reporting in our previous Corporate Law Update; and
• read more about the uplifting of company size thresholds for SMEs in our previous Corporate Law Update.

This is a long-standing project, and it is a positive step that the Government intends to continue rationalising what many feel are unduly burdensome requirements for businesses. Much of the content UK companies are required to report is duplicative or repetitive.

The continuing review provides an opportunity to carefully scrutinise what non-financial information is genuinely of benefit to investors and society, and whether the current structure of the annual report (including the separate directors’ and strategic reports) remains the best approach.

Corporate redomiciliations

The Government intends to consult on a new corporate redomiciliation regime.

“Redomiciliation” in this sense refers to the ability for a corporate entity to migrate its registered office from one legal jurisdiction to another so as to become governed by a different set of laws.

Unlike in some jurisdictions, redomiciliation into and out of the UK is currently not legally possible. A business that wishes to redomicile for corporate purposes in the UK needs to set up a new UK company, which then acquires the migrating business. This can create a range of difficulties, including from a tax, employment and contracts perspective.

In November 2021, the Government consulted on a new “inward-only” redomiciliation regime for the UK, allowing companies to redomicile into the UK, but not to leave the UK for another jurisdiction.

Respondents were supportive but many challenged the inward-only nature of the proposals. The consultation culminated in an expert report in October 2024, which supported both inward and outward redomiciliation, as well as giving further recommendations. This will be a key point to look out for as the Government progresses this reform.

We can also expect the further consultation to concentrate on the technical detail of such a regime.

It is encouraging to see further steps taken towards this change. The lack of a corporate redomiciliation regime arguably places the UK out of step with other jurisdictions, forcing businesses that wish to migrate to pursue cumbersome deal structures to achieve a move.

You can read more about the Independent Expert Panel’s report on corporate redomiciliations in our previous Corporate Law Update.

Payment practice reporting

The paper contains proposals to extend the UK’s payment practices reporting regime, under which large businesses are required to report, on a government portal, on the proportion of invoices they pay within specific periods of time.

The paper proposes to require large businesses to include this information in their annual reports, as well as a consultation on “potential legislative measures to go further”. We await to see precisely what the Government has in mind.

Read the Government’s Modern Industrial Strategy for the UK (opens PDF)