ARTICLE
18 August 2021

Doing Business In... 2021

M
Matheson

Contributor

Established in 1825 in Dublin, Ireland and with offices in Cork, London, New York, Palo Alto and San Francisco, more than 700 people work across Matheson’s six offices, including 96 partners and tax principals and over 470 legal and tax professionals. Matheson services the legal needs of internationally focused companies and financial institutions doing business in and from Ireland. Our clients include over half of the world’s 50 largest banks, 6 of the world’s 10 largest asset managers, 7 of the top 10 global technology brands and we have advised the majority of the Fortune 100.
The judicial system in Ireland is established by the Constitution, the principal courts being the district courts and circuit courts (with limited jurisdiction), the High Court...
Ireland Corporate/Commercial Law

1.LEGAL SYSTEM

1.1 Legal System and Judicial Order

The judicial system in Ireland is established by the Constitution, the principal courts being the district courts and circuit courts (with limited jurisdiction), the High Court (with unlimited jurisdiction in civil and criminal matters), the Court of Appeal (with appellate jurisdiction) and the Supreme Court (which usually exercises final appellate jurisdiction only). The judiciary is independent of the legislature and the executive.

Ireland is a member state of the EU and the United Nations. The Irish legal system is similar in many respects to that of the UK and the US. Irish law is based upon common law, statute and the Constitution of Ireland. The EU also represents an important source of Irish law and decisions of the Court of Justice of the European Union (CJEU) exercise significant influence over Irish law.

Following Brexit, Ireland is the only EU common law jurisdiction and this makes Ireland an attractive jurisdiction in which to establish operations and litigate international commercial disputes. Together with other factors, such as the ease of doing business in Ireland, this makes Ireland one of the best destinations for foreign direct investment.

2. RESTRICTIONS TO FOREIGN INVESTMENTS

2.1 Approval of Foreign Investments

The FDI Screening Regulation

Currently, Ireland has no foreign investment screening regime but the government has signalled its intention to introduce one with the inclusion of the Investment Screening Bill on recent legislative programmes. This development takes place against the backdrop of thE EU Investment Screening Regulation (Regulation (EU) 2019/452, the "FDI Screening Regulation") becoming effective in October 2020. The FDI Screening Regulation sets out rules which will enable scrutiny of investment ventures pursued within the EU by third countries (non-EU members), with a view to maintaining public order and security.

Individual member states retain discretion as to whether they implement a screening system but any such system must then meet basic criteria concerning confidentiality, transparency and the application of review timeframes. Ireland has taken its first steps in this direction by establishing an "FDI Screening Unit" within the Department of Enterprise, Trade and Employment and has conducted a public consultation on prospective investment screening legislation.

The Investment Screening Bill

The Department is also currently finalising draft legislation for the possible introduction of a new foreign investment or FDI screening regime, as mandated by the FDI Screening Regulation and has established an information sharing and cooperation framework across EU member state authorities. The legislation establishing the new Irish regime, the "Investment Screening Bill", was expected to be adopted as early as the end of H1 2021, however this has been delayed until H2 2021 or beyond. While the exact scope of the new FDI regime and whether it will give rise to additional mandatory notification requirements in certain instances remains unclear until the draft legislation is published, the Competition and Consumer Protection Commission (CCPC) is likely to have a role in administering the initial review under the new FDI regime, alongside the general merger control and media merger regimes.

In the meantime, Ireland is subject to the information-sharing mechanisms with other member states and the EU Commission as set out in the FDI Screening Regulation

2.2 Procedure and Sanctions in the Event of Non-compliance

There are currently no general requirements under Irish law for foreign investors to obtain investment approval.

2.3 Commitments Required from Foreign Investors

Irish authorities currently impose no specific commitments on foreign investors in relation to their investments.

2.4 Right to Appeal

In general terms, Irish authorities currently cannot block foreign investment, so there is no need for recourse to the various appeal mechanisms available under Irish law.

3. CORPORATE VEHICLES

3.1 Most Common Forms of Legal Entities

The Companies Act 2014 (the "Companies Act") provides for the creation of various types of corporate vehicles in Ireland. A company of any type may be incorporated with a single shareholder.

Company Limited by Shares (LTD)

The LTD is the model form of private company limited by shares and is the most common form of corporate vehicle used by foreign investors. The LTD has the same unlimited legal capacity as an individual. It has a one-document constitution and its internal regulations are set out in simplified form in that constitution. An LTD is prohibited from offering securities (equity or debt) to the public.

Designated Activity Company (DAC)

The DAC is an alternative form of private limited company. A key distinction between a DAC and an LTD is the existence of an objects clause in the DAC constitution. A DAC may be a suitable vehicle where an objects clause is needed (eg, to restrict the corporate capacity of a joint-venture vehicle) or for companies listing debt securities on a stock exchange.

Unlimited Company

The Companies Act recognises three distinct types of unlimited company:

  • the private unlimited company with a share capital (ULC);
  • the public unlimited company with a share capital (PUC); and
  • the public unlimited company without a share capital (whose liabilities are guaranteed by its members) (PULC).

Members of an unlimited company may be held liable on an unlimited basis for the debts of the company in the event of it entering insolvent liquidation. Like an LTD, ULCs may not offer for sale or list any new securities, but a PUC and PULC may list debt securities.

Public Limited Company (PLC)

The key distinction between PLCs and private companies is that only PLCs may list their shares on a stock exchange and offer them to the public. A Societas Europaea (SE), the European model company, is regarded as a PLC under the Companies Act. It must have a minimum issued share capital of EUR25,000. There is a general prohibition on the giving of financial assistance by a PLC in connection with the acquisition of shares in itself or its holding company.

Guarantee Company (CLG)

A CLG does not have a share capital and is a popular type of company for charities, sports and social clubs, and property management companies. The members' liability is limited to such amount as they undertake in the constitu tion of the company to contribute to the assets of the CLG in the event of its winding-up. A CLG has a two-document constitution, consisting of a memorandum and articles of association.

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Originally Published by Chambers Global Practice Guides

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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