Irish law means more screening of corporate transactions

The Act is designed to address security and public order concerns arising from foreign investment and to equip the state with powers to monitor and respond to potential threats.

To achieve this purpose, the Act primarily provides for the operation of a mandatory notification regime, under which certain transactions must be submitted to Ireland’s minister for enterprise, trade and employment for review. The Act sets out criteria to help businesses to determine whether a transaction they are involved in is notifiable under the new regime. Transactions are notifiable if all the criteria are met.

One of the criteria is that the cumulative value of the transaction and any related transactions is at least €2 million, while another criteria is that the transaction relates to or impacts on one or more ‘sensitive and strategic activities’, as categorised in the EU Screening Regulation. This includes critical infrastructure, such as energy, transport, water, health, and defence, as well as critical technologies and ‘dual use’ items, such as artificial intelligence (AI), cybersecurity, and biotechnologies.

Transactions that impact on activities pertaining to supply of critical inputs, like energy, raw materials, and food security, are also caught by the criteria, as are those impacting access to sensitive information and the freedom and pluralism of the media.

If the financial and activities criteria are met, notification of transactions would be required if, when completed, they would result in a party from a ‘third country’ acquiring control of an Irish entity or asset, or increasing their shareholding or voting rights in the entity above specified thresholds – from less than 25% to over 25%, or from less than 50% to over 50%. Third countries, for the purposes of the Act, are any countries other than EU member states, members of the European Economic Area (EEA), or Switzerland. It is noteworthy given the level of investment to Ireland from both jurisdictions, that both the UK and US are  third countries for the purposes of this legislation..

Notification must be made no less than 10 days prior to completion of the transaction – it is the responsibility of all parties involved in the transaction to meet the notification requirements. There is an exception to the notification requirement where the transaction concerns an internal reorganisation.

The minister has a duty under the Act to review transactions notified “as soon as [is] practicable” and made a screening decision within 90 days, or 135 days if an extension is required. The minister has powers to authorise, condition, or prohibit transactions from completing where they have reasonable grounds for believing the transaction affects or would be likely to affect national security and public order.

It is a criminal offence to complete or take steps to complete a notifiable transaction prior to the minister issuing a clearance decision, or to complete a conditional decision other than in accordance with the conditions outlined. Possible conditions could include divestment, behavioural, ring-fencing, or reporting requirements.

Parties can appeal screening decisions to an independent adjudicator. They have 30 days to notify the minister of their intention to appeal, and a further 14 days to submit the appeal to the adjudicator. There is a further right of appeal, solely on a point of law, to the High Court.

The Act also provides the minister with ‘call-in’ powers to allow them to scrutinise notifiable transactions that are not notified to them as well as non-notifiable transactions where they have reasonable grounds for believing the transaction affects or would be likely to affect national security and public order.