knowledge 6 January 2025 |

Irish Foreign Investment Screening Regime Goes Live Today

Introduction

Following several postponements, the Irish foreign investment screening regime enters into full force today.

The legislation providing for the regime, the Screening of Third Country Transactions Act 2023 (“Irish FDI Act”), was enacted on 31 October 2023.

Over the course of the past few weeks,

• the Department of Enterprise, Trade and Employment (“Department”) published the final version of its guidance on the regime, the Guidance for Stakeholders and Investors (“Guidance”),
• on 18 December 2024, the Irish Government issued a Commencement Order which confirmed that all provisions of the Act would commence today (6 January 2025), and
• the Department also published an amended version of the notification form on 3 January 2025.

The key elements of the new Irish foreign investment screening regime are therefore now in place.

In this briefing, we will provide a short overview of the new regime and summarise several notable changes in the final version of the Guidance. For a more in-depth look at the regime, please consult our earlier briefing.

Overview of the regime

The Irish FDI Act sets out a new mandatory notification regime, whereby parties are required to notify qualifying foreign acquisitions of Irish targets (whether assets or undertakings) active in particular sectors to the Minister for Enterprise, Trade and Employment (“Minister”). A standstill obligation also applies, meaning that a deal that is caught by the mandatory notification regime must be notified and cleared before completion, failing which criminal penalties may apply.

The thresholds for mandatory notification under the Irish FDI Act may catch many foreign acquisitions of Irish targets, with:

• investments from ‘friendly’ jurisdictions such as the UK, US and Canada being potentially within scope,
• a low threshold for deal value (€2 million in the absence of an amount prescribed by the Minister), and
• potential application where the transaction relates to or impacts upon five broadly defined ‘sensitive’ sectors. 

The mandatory notification regime sits alongside a broad power of the Minister to call in for review deals that are not within the scope of the mandatory regime.

As set out within the Irish FDI Act, the Minister has wide-ranging powers, including to prohibit, or impose remedial measures, where he or she considers that a transaction may present risks to the security or public order of the State. 

Further detail on the notification thresholds and the timing for clearance are provided in our earlier briefing.

Changes in the final Guidance

The final version of the Guidance provides clarification on the scope of the sensitive sectors as well as other notable changes on jurisdictional thresholds and procedure.

Critical Infrastructure

The Guidance continues to confirm that this sector should be interpreted primarily by reference to whether the target’s activities correspond to a category of entity in Annex 1 to the EU’s Critical Entities Resilience Directive (2022/2557). However, the Guidance now also refers to critical financial infrastructure, which means the following categories of financial infrastructure may be within scope of the mandatory notification regime: payment systems and payment institutions, electronic money institutions, market operators and investment firms that operate a multilateral trading facility or organised training facility, central securities depositaries, amongst others.

The Guidance also adds that investors and parties to transactions dealing with cybersecurity issues should be cognisant of entities within scope of Directive (EU) 2022/2555, which concerns measures for a high common level of cybersecurity across the Union.

Critical Inputs

While earlier versions of the Guidance focused on raw materials falling within this sector, the Guidance now also references medicines for human use that are essential for the proper functioning of the EU healthcare system and whose shortage would lead to an interruption in treatment and thus serious harm to patients. The Guidance directs undertakings to the “Union list for critical medicines” which provides guidance and should be consulted in this regard.

Third Country Undertaking

The screening mechanism in the Irish FDI Act applies to transactions and acquisitions by ‘third country undertakings’ and mandatory notification may be required where the direct investor or the ultimate owner of the investor is a third country undertaking. The Guidance now clarifies that notification may be required even in transactions 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., not meeting the definition of a third country undertaking). This highlights the importance of the choice of acquisition vehicle for certain transactions.

Right to be Heard

The Guidance contains new references to the right to be heard, which is provided for in section 21 of the Irish FDI Act. It states that, in addition to the information provided via a notification form, a notifying party may also make an additional submission to the Minister relating to their application. This is to be welcomed, as the existing notification form does not specifically allow the notifying parties to provide their views on the likelihood of national security concerns.

Next Steps

The final version of the Guidance, notification form and other materials can be accessed on the Department’s website. Parties which have upcoming or yet-to-close transactions with an Irish element should familiarise themselves with the new regime and consider whether a mandatory notification is required.

For any queries, please contact Laura Treacy, Stephen Ryan or your usual contact within the Competition & FDI team at McCann FitzGerald LLP.