23 August 2022

An Overview Of The Proposed Investment Screening Regime In Ireland

Arthur Cox


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A draft of the Screening of Third Country Transactions Bill 2022 (the "Bill") was published on 2 August 2022.
Ireland Antitrust/Competition Law
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A draft of the Screening of Third Country Transactions Bill 2022 (the "Bill") was published on 2 August 2022.  The Bill sets out a framework to enable the Minister for Enterprise, Trade and Employment (the "Minister") to review, for the first time, transactions involving foreign investment that may impact on security or public order in Ireland.


Once enacted, the legislation will give the Minister the power to mitigate the effect of transactions in sensitive sectors identified as problematic or, if necessary, prohibit them outright.

This note provides an overview of the key aspects of the proposed investment screening regime in Ireland as provided for under the draft Bill. The Bill is expected to begin the legislative process in the autumn 2022 parliamentary session, and it is likely to undergo amendments during the course of the legislative process.  The final Bill is currently expected to be enacted by late 2022 or early 2023.

Key Provisions of the Draft Bill

Notifiable transactions

The Bill covers any transaction, acquisition, agreement or other economic activity relating to a change of control of an asset in Ireland or the acquisition of all or part of any interest in an undertaking in Ireland. Such transactions are notifiable on a mandatory basis if they meet all of the following criteria:

  • A third country undertaking (as described below), or a person connected with such an undertaking, is a party to the transaction;
  • The transaction directly or indirectly relates to, or impacts upon, one or more of the relevant matters (as described below);
  • The value of the transaction is equal to or greater than an amount to be specified by the Minister (or, in the absence of specification, €2 million); and
  • The transaction relates to an asset or undertaking in Ireland.

A transaction that results in the acquisition of shares or voting rights in an undertaking (as opposed to a change of control of an asset) is not notifiable unless: (i) all of the above criteria are satisfied; and (ii) the percentage of shares or voting rights held by the person in the undertaking changes from:

  • 25 per cent or less to more than 25 per cent; or
  • 50 per cent or less to more than 50 per cent.

Third Country Undertakings

A "third country undertaking" is defined as any undertaking1 that is:

  • constituted or otherwise governed by the laws of a third country;
  • controlled by2 at least one director, partner, member or other person, who is a third country national or is constituted or governed by the laws of a third country; or
  • a third country national.

A "third country" is defined as any country that is not a member state of the EU, a member of the EEA or Switzerland.  Thus, for example, investments by UK and US undertakings that meet the criteria for notification would be subject to the Irish investment screening regime.

Relevant matters

Reflecting Article 4(1) of the EU FDI Regulation,3 the Bill applies to transactions that directly or indirectly relate to, or impact upon, one or more of the following matters:

  • Critical infrastructure, including energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure and sensitive facilities, including the land/real estate used crucial for the use of such infrastructure;
  • Critical technologies and dual use items4 including AI, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies, nanotechnologies and biotechnologies;
  • Supply of critical inputs, including energy or raw materials, as well as food security;
  • Access to sensitive information, including personal data or the ability to control such information; and
  • The freedom and pluralism of the media.5

Minister's power to 'call in' non-notifiable transactions for review

It is important to note that, under the Bill, the Minister also has a broad discretion to 'call in' transactions for review regardless of whether they are notifiable or non-notifiable if the Minister has reasonable grounds for believing that they would affect, or would be likely to affect, the security or public order of Ireland.

The Minister cannot 'call in' a non-notifiable transaction more than 15 months after the transaction has completed.

Procedure for notifying

Parties to a notifiable transaction are required to submit a notification to the Minister at least 10 days prior to the completion  of the transaction. Failure to notify within this timeframe would result in the transaction being deemed to be the subject of a negative screening decision by the Minister (see below for more on screening decisions), made on the day before the date on which the transaction is completed. In addition, a failure to notify a notifiable transaction within this time-frame is a criminal offence (see below for more on penalties). The Bill provides for a transitional arrangement for transactions that are proposed but not completed before the relevant provision of the Bill comes into operation under which the parties to the transaction have additional time to notify.6

Under the Bill, a notification must include at a minimum the following information:

  • Details of the parties;
  • The ownership structure of the parties to the transaction, including information on persons participating in the capital of the undertaking and persons exercising control over the parties;
  • Details of the transaction, including projected date, approximate value, funding and source of funds;
  • Information on the products, services and business operations of the parties to the transaction;
  • The nature of the economic activities carried out in Ireland by the parties to the transaction and the EU Member States where the parties carry out economic activities;
  • The state or territory under whose laws the parties are constituted, registered, or otherwise organised;
  • The annual turnover and total number of employees of each party; and
  • Details of any sanctions or restrictive financial measures imposed on the parties by the EU.

Who is required to notify?

The obligation to notify applies to all parties to a notifiable transaction (except for any party that is unaware of the transaction).

The Bill provides for a process under which a party to a notifiable transaction can consent to another party notifying on its behalf.

Minister's power to review non-notified transactions

The Minister can commence a review of a notifiable transaction that has not been notified for up to 5 years from the date of completion of the transaction or 6 months from when the Minister becomes aware of the transaction, whichever is later.

Minister's power of retrospective review

The Bill allows the Minister to review transactions that completed up to 15 months prior to the coming into operation of the relevant provision of the Bill regardless of whether they are notified or notifiable.

Timetable for reviews

The Minister will issue a written "screening notice" to the parties as soon as practicable following the commencement of the review, and will issue a "screening decision" within 90 days after receiving the notification (in the case of a notified transaction) or the issuing of the screening notice (where a transaction has not been notified but the Minister exercises the power to 'call in' a transaction for review).  The review timetable can be extended to 135 days.

Where a screening notice has been issued, the transaction cannot be completed and the parties cannot take any action for the purpose of completing or furthering the transaction until the Minister makes a screening decision approving the transaction.

Where the transaction has already completed (e.g. a non-notified transaction), the Minister may direct the parties to the transaction to take such actions as the Minister may specify for the purpose of protecting the security or public order of Ireland (including divestment of the business, shares, assets, property or intellectual property in question).

Requests for further information

The Minister may, at any time following the commencement of a review, issue a "notice for information" where further information is considered necessary. The issuing of a notice for information suspends the review timetable, starting from the date on which the notice is issued until the date on which the Minister confirms that the relevant party has provided all of the requested information.

Considerations when reviewing transactions

In reviewing a transaction, the Minister will assess whether the transaction affects, or would be likely to affect, the security or public order of Ireland, having regard to the following factors:

  • Whether a party to the transaction is controlled by a government of a third country and the extent to which such control is inconsistent with the policies and objectives of Ireland;
  • The extent to which a party to the transaction is already involved in activities relevant to the security or public order of Ireland;
  • Whether a party to the transaction has previously taken actions affecting the security or public order of Ireland;
  • Whether there is a serious risk of a party to the transaction engaging in illegal or criminal activities;
  • Whether the transaction presents, or is likely to present, a person with an opportunity to undertake actions that are disruptive or destructive to persons in Ireland, improve their access to sensitive undertakings, assets, people or data, or undertaking espionage affecting or relevant to the interests of Ireland;
  • Whether the transaction would likely have a negative impact in Ireland on the stability, reliability, continuity or safety of the relevant matters (as set out above);
  • Whether the transaction would result in persons acquiring access to information, data, systems, technologies or assets that are of general importance to the security or public order of Ireland;
  • Comments of EU Member States and the opinion of the European Commission; and
  • The extent to which the transaction affects, or is likely to affect, the security or public order of another EU Member State or the European Union.

The Minister is required to take into account written submissions made by the parties to the transaction and to consult with an "advisory panel", comprising civil servants drawn from a number of key government departments, as well as other government ministers.

The screening decision  

The Minster's screening decision would either authorise the transaction with or without conditions or would prohibit the transaction on security or public order grounds.  Conditions can include divestment requirements, behavioural requirements, ring-fencing requirements, and compliance reporting obligations.

The Minister must inform the parties to the transaction of the decision in writing as soon as practicable, together with the reasons for the decision.  The Minister may decide not to provide reasons if doing so would create a risk to security or public order.

Penalties for non-compliance

Under the Bill, it is a criminal offence to:

  • Fail to notify a notifiable transaction as required under the Bill;
  • Where a screening notice has issued in respect of a transaction, complete the transaction, or take any action for the purpose of completing or furthering the transaction until the Minister makes a screening decision approving the transaction;
  • Where a transaction is subject to a conditional screening decision, complete the transaction other than in accordance with the conditions;
  • Where the Minister makes a screening decision blocking a transaction, complete the transaction, or take any action for the purpose of completing or furthering the transaction;
  • fail to comply with a notice for information;
  • provide the Minister with information that the party knows is false in a material respect, or is reckless as to whether it is false in a material respect.

Criminal penalties for non-compliance on any of these grounds may apply to companies and individuals, and include fines of up to €4 million and/or a term of imprisonment of up to 5 years (for conviction on indictment).


The Bill provides that the parties to a transaction may appeal a screening decision to an independent adjudicator and must notify the Minister that they are appealing no later than 30 days after being notified of the screening decision. The appellant must submit the appeal to the adjudicator within 14 days after providing notice to the Minister. A decision of an adjudicator may be appealed on a point of law to the High Court.

Impact on M&A transactions in Ireland

The introduction of a mandatory and suspensory foreign investment screening regime in Ireland will be a significant development in the regulatory landscape in Ireland.  Given the level of inbound foreign direct investment into Ireland from outside of the EU, EEA and Switzerland and the wide-ranging powers granted to the Minister under the Bill, the new regime is likely to have a significant impact in practice.

Once the Bill is enacted, parties to transactions will need to carefully assess the applicability of the new regime to their transaction and, where a filing obligation arises, potentially plan for a lengthy review period and its impact on the deal timetable.  This includes transactions that have not completed by the time the Bill is enacted and commenced (currently expected to be in late 2022/early 2023).  Parties will also need to consider the potential implications of the Minister's ability to retrospectively review transactions that have already completed when the new regime comes into operation.


1 An "undertaking" includes "any person (including an individual, a body corporate, a partnership or any other unincorporated body of persons) engaged for gain in the production, supply or distribution of goods, the provision of services, the making or holding of investments or the carrying out of any other economic activity, but does not include a natural person whose role in such activities is limited to working under a contract of employment or a contract for services for an undertaking."

2 Section 2 of the Bill provides that a person shall be regarded as exercising control of an undertaking where they can directly or indirectly exercise influence over the activities of the undertaking by means of the exercise of: (i) voting rights, securities or contracts; (ii) ownership rights over the assets of the undertaking; or (iii) other rights or contracts, enabling influence to be exercised with regard to the composition, voting or decisions of the undertaking.  This is a relatively broad concept and unlike Section 16(2) of the Competition Act 2002 (as amended) (the "Competition Act") relation to the Irish merger control regime, the Bill does not refer to the ability to exert decisive influence in order to have control.

3 Regulation (EU) 2019/452.

4 As defined in point 1 of Article 2 of Council Regulation (EC) No 428/2009.

5 Ireland already has an existing regime for the review of "media mergers" as set out in Part 3A of the Competition Act. The media merger regime will continue to apply in parallel with the investment screening regime.

6 The parties have 30 days from the later of the date of completion of the transaction or when the relevant provision of the Bill comes into operation./p>

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

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