In preparation for the imminent launch of Foreign direct investment (FDI) of Ireland screening regime, the Department of Enterprise, Trade, and Employment (DETE) has released draft guidance outlining key aspects of the forthcoming framework. “Inward Investment Screening: Guidance for Stakeholders and Investors” sheds light on the anticipated operational procedures and requirements under the new regime.
Key Highlights
Mandatory Notification Requirement: The regime introduces a mandatory notification requirement for investments into Irish businesses or assets exceeding €2 million, particularly targeting transactions involving investors from outside the European Union, the European Economic Area, and Switzerland.
Screening Process: Upon notification, parties will receive a screening notice, initiating a review period of up to 90 calendar days. Transactions cannot proceed until clearance is obtained.
Sectoral Focus: The regime focuses on five critical sectors, including critical infrastructure, critical technologies, critical inputs, sensitive information, and freedom and pluralism of the media. This wide scope necessitates careful diligence to determine applicability.
Responsibility for Notification: While the Act does not specify, the acquiring party is generally expected to submit the notification, with all parties obligated to ensure accuracy.
Consequences of Non-Compliance: Failure to notify may result in criminal penalties, including fines and imprisonment for directors. Transactions not notified can be retrospectively reviewed for up to five years.
Review Timelines: While the initial review period is set at 90 days, efforts are underway to streamline processes and align timelines with other regulatory frameworks to expedite non-problematic transactions.
Considerations for Minority Investors: The treatment of minority investors raises concerns, as they may be subject to notification requirements despite not meeting thresholds individually. Clarity is needed to avoid disproportionate burdens on minority shareholders.
Implications for Investors
Early Preparation: Investors should anticipate the mandatory notification requirement and factor potential delays into deal timetables.
Sectoral Analysis: Thorough due diligence is crucial to determining if a target company operates within the regulated sectors.
Proportionate Compliance: Businesses must ensure accurate and timely notification, with particular attention to the responsibilities of minority investors.
Engagement with Regulatory Bodies: Close engagement with DETE and compliance with guidance will be essential to navigate the new regulatory landscape effectively.
As Ireland joins other EU member states in bolstering FDI oversight, stakeholders must adapt to the evolving regulatory environment to ensure seamless transactions while upholding national security and economic interests.
