Investors in early-stage companies across Scotland have warned that new national security legislation could impact activity in the start-up sector.

Under the new regulations, investors taking a stake of 25 per cent or otherwise acquiring some control over a company involved in sectors deemed important for national security must get clearance from the UK’s Department for Business, Energy and Industrial Strategy (BEIS) before the deal goes through. Known as the National Security and Investment Act, the law came into force on January 4.

Its aim is to prevent potentially hostile overseas investors from gaining control of sensitive technology and infrastructure – such as artificial intelligence, nuclear and energy assets – but domestic investors say the legislation’s loose wording is sowing uncertainty.

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“We absolutely recognise that there is a real need to protect national security interests, but the provisions are very widely drawn, so they are perceived by the investment and legal community to capture a whole scope of investment activity [that wasn’t intended],” said Tom Croy, senior investment manager at Par Equity.

Investors are pressing for further guidance – akin to advisory notes issued in the wake of new tax legislation – but say they have yet to receive any clarity.

Public sector organisations such as Scottish Enterprise, which frequently matches investments alongside angel syndicates, are not excluded from the legislation. A spokeswoman for Scottish Enterprise said the organisation is continuing to “work with partners to fully understand” the implications of the new legislation.