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Irish FDI Screening Regime: Here We Go

6 January 2025 has been confirmed by the Department of Enterprise, Trade and Employment (“Department”) as the commencement date of the Screening of Third Country Transactions Act 2023 (the “Act”) that establishes a new foreign direct investment (“FDI”) screening regime in Ireland in respect of transactions involving ‘third country’ (ie non-EU/EFTA) investors.  The Department’s final guidance document for stakeholders and investors has also been published (“Guidance”) which provides further clarification.  The Department’s actual enforcement approach will ultimately determine, and set the tone for, the scope and intensity of review of in-scope transactions.

Commencement of the Regime and Implications

The much-anticipated commencement of the regime on 6 January 2025 means parties and advisors need to ensure preparedness for transactions potentially within scope.

Mandatorily notifiable transactions

Transactions involving third country investors that meet the mandatory notification criteria under the Act will need to be notified to, and approved by, the Department before closing. 

This is initially subject to the 10-calendar day ‘grace’ period which means that if a mandatorily notifiable transaction is completed within 10 calendar days of commencement of the Act (ie, by 15 January 2025), the mandatory notification obligation is deemed to be satisfied if a notification is subsequently submitted within 30 calendar days of completion.  The suspensory obligation requiring parties to wait for the Department’s approval before completion takes place will also not automatically apply (although the Minister has reserved the right to issue a screening notice and impose a suspensory obligation, if security or public order concerns are subsequently identified). 

From 16 January 2025, after the initial ‘grace’ period ends, all mandatorily notifiable transactions need to be notified 10 calendar days before completion and parties may not complete the transaction if jurisdiction is accepted (ie by the issuance of a screening notice) and until the Minister approves the transaction (ie by the issuance of a screening decision).

Minister’s residual ‘call-in’ power

Second, the Minister may call-in transactions that do not meet the mandatory notification criteria, but where there are reasonable grounds for believing that the transaction affects, or is likely to affect, security or public order in the State, amongst others.  The Minister may exercise this power in the case of non-notifiable transactions for a period of 15 months from the date of completion.  It is currently expected that the call-in power will only be exercised in cases which raise significant  security or public order concerns.  Note the call-in power may also be exercised in the case of mandatorily notifiable transactions that are not notified and the Minister may do so for a period of the later of 5 years post-completion or 6 months after the Minister becomes aware of the transaction.

Scope of the regime in light of the FDI Guidance

The final version of the FDI Guidance has also been published and the scope of a number of key elements of the regime has now been clarified.  In doing so, the FDI Guidance has however expanded the approach in relation to certain elements of the regime and uncertainty still remains in relation to various other elements. 

Some of the notable points arising from the final FDI Guidance include the following:

  • ‘Third country’ undertaking – A mandatory notification is required where either the direct investor (ie the entity directly involved in the acquisition of the target entity or group) or the ultimate owner of the investor group is a ‘third country’ (ie non-EU/EFTA) undertaking.  So where the direct investor is a ‘third country’ undertaking, but the ultimate owner of the investor group is not, a mandatory notification may still be required.
  • ‘In-scope’ transactions – Transactions which involve a change of control of an asset in the State, or a change in the percentage of shares or voting rights that it holds in an undertaking in the State from below 25% to above 25% and from below 50% to above 50%, may be mandatorily notifiable.  This excludes internal restructurings where the same undertaking controls all parties to the transaction.  The scope of transactions which may be subject to the call-in power is however broader.
  • Sensitive matters – The final FDI Guidance clarifies a number of points in relation to the interpretation of how a transaction may “relate to, or impact upon” one or more of the five sensitive matters under the Act, which cross-refers to Article 4(1)(a)-(e) of Regulation 2019/452 (ie critical infrastructure; critical technologies and dual-use items; supply of critical inputs; sensitive information, including personal data; and freedom and plurality of the media).  First, it has been clarified that the phrase “relates to, or impacts upon” is broad and subjective to ensure that any acquisitions that could give rise to risks to the security or public order of the State are within scope.  Second, it has also been clarified that the “Irish element of the target” (as it is referred to in the FDI Guidance) must relate to one or more of the sensitive matters.  Third, more guidance has been given on the scope of the sensitive matters themselves, in particular critical technologies (which has been clarified to include non-dual use critical technologies within the specified categories) and critical inputs (which has been clarified to include sectors beyond those specified, eg the health sector). 

While the final FDI Guidance offers much welcome clarification on the scope of the regime, as has always been the case, the Department’s actual enforcement approach in its administration of the regime will ultimately determine, as well as set the tone for, the scope and intensity of review of in-scope transactions.  Parties and their advisors will therefore need to keep a watching brief on how the regime is administered as part of the overall analysis of the applicability of the regime.

Getting Ready

In-scope transactions may be notified to the Department from 6 January 2025.  The notification form used by the Department replicates the form used by the European Commission to facilitate the exchange of information between Member States.  The information requested by the form is to be uploaded via a Case Management System portal which has not yet been published but which will be uploaded to the Department’s webpage before 6 January.

Should you have any queries, please contact the Matheson Competition & Regulation group.