1. Legal System

1.1 Legal System

The judicial system in Ireland is established by the Constitution of Ireland, 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 the common law, statute and the Constitution. 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.

Ireland is the only EU common law jurisdiction, making it an attractive jurisdiction in which to establish operations and litigate international commercial disputes. Other factors, such as the ease of doing business and the fact that it is the only eurozone country in which English is the main language spoken, make 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 Screening of Third Countries Transactions Bill in 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 Screening of Third Countries Transactions Bill

The Department is currently finalising draft legislation for a new foreign investment or FDI screening regime, as mandated by the FDI Screening Regulation. The Screening of Third Countries Transactions Bill remains unpublished but remains high on the legislative agenda. While the exact scope of the new FDI regime and whether it will give rise to additional mandatory notification requirements 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 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 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 constitution 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.

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