News

The Foreign Investment Screening Regime comes into force in Ireland

10 January 2025

In line with international and European developments, Ireland has introduced a new regime to provide for a process to allow for certain transactions that may present risks to the security or public order of the State to be reviewed by the Minister for Enterprise, Trade and Employment. The legal framework for the regime is contained in the Screening of Third Country Transactions Act 2023, which came into force by Ministerial Order on 6 January 2025.

The obligation to notify applies to all parties to a notifiable transaction (except for any party that is unaware of the transaction). The Act provides for a process under which a party to a notifiable transaction can consent to another party notifying on its behalf. The Minster may, having made a screening decision that a transaction affects or would likely affect the security or public order of the State, impose conditions for approval. While neither the filing or the outcome is published, the Minister, in considering whether or not the transaction affects or is likely to affect the security or public order of the State, may consult any other person the Minister considers appropriate and may enter into discussions with the parties to the transaction or with any other person with a view to identifying measures that would ameliorate any effects of the transaction on the security or public order of the State. The Act exempts purely intra-group transactions, i.e. if the same undertaking controls, directly or indirectly, all the parties to the transaction, the mandatory notification will not be triggered.

See our Foreign direct investment guide here

Next steps

The FDI procedure can be a key factor in M&A transactions, especially if target companies in the high-tech sector are involved. The parties should not underestimate the complexity and time required to complete the procedure.

The parties should therefore make sure to address potential risks of delay or even failure of transactions from the outset, for example by:

identifying whether the Irish target company is active in one of the listed strategic sectors,
mapping the political landscape and preparing a strong storyline to explain the benefits of the transaction,
proactively considering solutions to mitigate potential concerns, for example by offering certain commitments or carving-out highly strategic business operations,
defining (deemed) clearance as a closing condition,
including a right of termination in the event that the deal is not cleared before a certain long stop date,
specifying how the parties will respond to a prohibition or instructions and who bears the costs, and
considering a break-up fee to be paid by the buyer in the event of a prohibition.