Foreign Direct Investment (FDI) Screening is a procedure that allows the State to assess and investigate foreign investments. It also lets the State authorise, set conditions for, or prohibit these investments. The decision is based on various security and public order criteria.
The introduction of national FDI Screening regimes is a global trend, with many EU Member States now having FDI Screening regimes in place. In line with this trend, Ireland aims to introduce the State’s first FDI Screening regime via the Screening of Third Country Transactions Act 2023 (the FDI Act). This legislation is expected to come into force in September 2024.
FDI Screening in Ireland
Before proceeding with a transaction, the FDI Act requires investors, from outside the EEA and Switzerland, to notify the Minister for Enterprise, Trade, and Employment (the Minister) if a transaction meets the following four criteria:
- Acquires control of an asset or undertaking in the State, or changes the percentage of shares or voting rights in an undertaking in the State above 25% or 50%.
- The entire transaction value, across multiple investments over 12 months, is at least €2 million.
- The transaction does not involve parties controlled by the same investor.
- The transaction relates to or impacts one or more of the critical sectors under the Act:
- Critical infrastructure
- Critical technologies and dual use items
- Supply of critical inputs
- Access to sensitive information, and freedom and pluralism of the media
The FDI Act introduces criminal offences for failure to notify and breach the standstill obligation (i.e., to not complete or takes steps to complete a transaction that is being reviewed by the Minister until it has been approved).
The Minister additionally has significant powers under the FDI Act to “call-in” in notifiable transactions that were not notified and non-notifiable provided that the Minister has grounds to suspect that the transaction affects or would likely affect the security of the State. The Minister must make a screening decision within 90 calendar days from the date on which the Minister issues a screening notice. This 90-day period can be extended to 135 days at the Minister’s discretion. This period is suspended where the Minister issues a ‘’notice of information’’ i.e. request for further information.
Impact on clients
Like FDI Screening in other jurisdictions, investors should consider whether any transactions could come within the scope of the FDI Act.
Investors involved in transactions with an Irish nexus should seek legal advice, particularly regarding whether the transaction meets the mandatory criteria. The requirements under the FDI Act will also need to be factored into the timeline of the transactions, with specific provisions for the deal documentation.
Early engagement on these and other questions is advisable. Please get in touch with a member of our Competition & Antitrust team for more information.
The content of these articles are provided for information purposes only and does not constitute legal or other advice.