12 March 2024

New Irish FDI Screening Regime: Key Points



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The Screening of Third Country Transactions Act 2023 (the "Act") will establish a new FDI screening regime in Ireland. The Act was signed into law by the Minister for Enterprise...
Ireland Government, Public Sector
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The Screening of Third Country Transactions Act 2023 (the "Act") will establish a new FDI screening regime in Ireland. The Act was signed into law by the Minister for Enterprise, Trade and Employment (the "Minister") on 31 October 2023 and the current expectation is that it will come into force in Q2 2024. The Act is designed to implement the EU Investment Screening Regulation (2019/452) ("the EU FDI Regulation") and ensures that the Irish Government has the necessary legal powers to screen investments by 'third country' (ie, non-EU, EEA and Switzerland) undertakings and individuals in certain key infrastructure assets with an Irish nexus, eg, investments into critical utilities and infrastructure sectors, high-tech and personal data focussed businesses, and media businesses.

Key takeaways:

  • The new Irish regime needs to be considered in parallel with other foreign investment regimes, as well as Irish and international merger control rules, in order to determine approval requirements and the impact on deal timelines.
  • The very low jurisdictional thresholds and the wide range of sectors covered means that a large number of transactions with an Irish nexus could require pre-completion approval.
  • In the case of mandatorily notifiable transactions, deal timelines will be impacted by relatively long clearance timeframes of up to 90 days (which can be extended).
  • Non-notifiable transactions may also be subject to a post-completion 'call-in' risk if they raise potential public order or national security concerns. We expect that the 'call in' power will be used sparingly and for obvious cases.
  • It remains to be seen how the regime will be administered in practice and although guidance has been issued by the Department of Enterprise, Trade and Employment ( the "Department") this is not yet finalised and is expected to evolve over the coming months and before the Act comes into force.

New Mandatory Notification Requirement

Under the Act, a new mandatory notification requirement and screening procedure, undertaken by the Minister and his Department, will be required for certain transactions that involve third-country undertakings, if the following cumulative conditions are met:

  • Non-EU investor: third-country undertaking or a connected person is a party to the transaction;
  • Relevant transaction: the transaction involves a change of control of an asset in the State (ie, the Republic of Ireland) or a defined change in the percentage of shares or voting rights held in an undertaking in the State (where there is a presumption of a change of control from below 25% to above 25%, and from below 50% to above 50%);
  • Transaction value: the value of the transaction is at least €2 million; and
  • Relevant matter/sector: the transaction relates to, or impacts on, critical infrastructure, critical technologies or dual-use items, critical inputs including natural resources, access to sensitive data and/ or the freedom and plurality of the media.

Informal queries / 'precautionary' notifications

Once the regime comes into force, it may be possible to raise informal queries in relation to a transaction on a no-names basis. It is hoped that the Minister and his Department might be able to revert on informal queries within two weeks, subject to liaising with stakeholders across other departments and government bodies. The Minister will accept notifications being made on a precautionary basis and will use the period until the issuance of the formal screening notice, which commences the formal Phase 1 review, to confirm whether the transaction meets the jurisdictional thresholds

What is the Effect of the Notification?

Similar to the existing Irish and EU merger control regime, the Act prescribes a 'stand-still' or suspensory obligation until clearance is received from the Minister which means that parties cannot complete a notifiable transaction until such clearance has been obtained.

What Transactions are Caught?

A 'transaction' includes any transaction that involves a change of control of an asset in the State or a change in the percentage of shares or voting rights held in an undertaking in the State.

The concept of 'control' is the same as that which applies under the EU and Irish merger control regimes and is focussed on the concept of 'decisive influence'. This may arise directly or indirectly through a number of means, eg, voting rights or securities, ownership of assets of the undertaking or rights and contracts providing influence over the decisions of the undertaking (eg, negative control rights / vetoes over key decisions involving the business plan, budget, appointment of key employees or a majority of the board) or even investment management agreements, where an investment manager or general partner controls the investment strategy of the portfolio companies or the fund.

Appendix 1 below sets out the decision tree in relation to the Irish FDI screening thresholds.

What Sectors are Affected?

The Act cross-refers to the categories set out in Article 4(1) of the EU FDI Regulation and focuses the notification obligation on transactions that relate to, or impact upon, the below sectors / businesses:

  • Critical infrastructure including energy, transport, water, communications, aerospace, defence, data storage and processing, etc;
  • Critical technologies or dual-use items including artificial intelligence, robotics, semiconductors, cybersecurity, etc;
  • Critical inputs including energy, raw materials and food security;
  • Access to sensitive information including personal data; and
  • Freedom and plurality of the media.

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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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