Page Contents
Key contacts
Related areas
On 6 January 2025, Ireland commenced the screening of foreign direct investments under the Screening of Third Country Transactions Act 2023 (the Irish Screening Act). The Irish Screening Act introduces a mandatory and suspensory notification regime for certain transactions involving third country undertakings (or persons connected with third country undertakings). Ireland is one of the last EU Member States to adopt an FDI screening regime so planning for and dealing with FDI risk should already be familiar to most investors.
The statutory period of review is a relatively lengthy 90 days which can be extended to 135 days. Guidance issued by the Inward Investment Screening Unit in the Department of Enterprise, Trade and Employment (the Guidance) indicates that the 90-day time period is the outer bound of time for completion of the screening process and that the Department intends to complete reviews in as short a time frame as possible subject to receiving the required inputs including from the European Commission and other Member States. The Guidance also confirms that it is possible to notify on the basis of a “good faith” intention to complete a deal.
There are various criminal penalties provided for under the Irish Screening Act including for failure to notify a notifiable transaction. The criminal dimension to the Irish Screening Act is likely to heighten the focus on the Irish FDI screening regime.
What is the purpose of the Irish Screening Act?
The Irish Screening Act allows the Minister for Enterprise, Trade and Employment (the Minister) to review both direct and indirect foreign investments in Ireland. The Act covers acquisitions, agreements and other economic activity involving a change of control of an asset in Ireland or the acquisition of all or part of or of any interest in an undertaking in Ireland. A third country undertaking is an undertaking from outside the EU, the EEA and Switzerland. The Guidance confirms that mandatory notification is required both where the direct investor or the ultimate owner of the investor is a third country undertaking and where the direct acquirer meets the definition of a third country undertaking under the Act but is ultimately controlled by an EU/EEA/Swiss parent (i.e., is not a third country undertaking).
The substantive test for review by the Minister is whether the transaction affects or would be likely to affect the security or public order of the State. The Irish Screening Act prescribes a number of criteria that the Minister must have regard to in his or her review. The Minister must also have regard to any comments submitted by other Member States and any opinion of the European Commission as well as the views of a specially appointed advisory panel. The Minister may also consult such other Ministers of the Government and other persons as appropriate. Transactions can be cleared, cleared subject to conditions or prohibited by the Minister.
Notification Requirements under the new regime
The new regime introduces a mandatory notification requirement for transactions where:
The legislation helpfully clarifies that internal restructurings are not caught by the Irish Screening Act.
There is a retrospective dimension to the Act in that the Minister is permitted to review transactions that have been completed within 15 months of the Act coming into force (i.e. transactions completed since 6 October 2023). The Minister can also “call-in” transactions, whether they are notifiable or not, if the Minister has reasonable grounds for believing that the transaction would affect, or would be likely to affect, the security or public order of Ireland. Non-notifiable transactions can be called in up to 15 months after completion.
Where the Minister finds that a transaction affects or would be likely to affect security or public order in Ireland, directions may be issued to the parties, including directions not to complete the transaction, to make divestments or to modify or cease a specific conduct or practice. Prior to receiving clearance, parties to a notified transaction must not take any measures to complete that transaction. It is a criminal offence under the Irish Screening Act to complete, or take steps to complete, a transaction under review by the Minister prior to the Minister issuing a screening decision clearing the proposed transaction or clearing it subject to conditions. Where the transaction is subject to a conditional screening decision, it is an offence to complete the transaction other than in accordance with those conditions.
Conclusion
While the Irish Screening Act is a significant development in providing the Minister with the power to assess, investigate, authorise, mitigate or prohibit foreign investments in Ireland based on a range of criteria, the Guidance recognises that foreign investment remains key to Ireland’s economic growth and development and that it is anticipated that only a small number of investments, mergers or transactions might pose a risk to security and public order in Ireland.
Notwithstanding that only a small number of transactions are likely to give rise to substantive concerns, the new regime will present an additional regulatory hurdle for third country investors in Ireland. It is likely that the Department will experience an influx of notifications in the coming weeks not least because the suspensory obligation will not apply to transactions completed between 6 and 15 January 2025 (provided those transactions are notified within 30 days of completion). In addition, given that this is a new and unprecedented regime in Ireland, there will initially be a number of precautionary notifications while parties seek legal certainty around the scope of the notification thresholds.
For further information on the new FDI Screening regime, please contact any member of A&L Goodbody’s EU, Competition & Procurement team.
