The Screening of Third Country Transactions Act 2023 (the Act) is now fully operational. Yesterday (6 January 2025), was the ‘go live’ date for Ireland's first foreign direct investment (FDI) screening regime, which will be operated by a dedicated team in the Department of Enterprise, Trade and Employment (the Department).
The Department's Inward Investment Screening Notification Portal (the IIS Portal) is now live and guidance for stakeholders, the Notification Form and a user guide to the IIS Portal are available on the Department's dedicated webpage.
What's in scope?
A transaction must be notified under the Act where it meets all four of the criteria set down in section 9(1), which are:
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A third country undertaking (or connected person) acquires control of an asset or undertaking in the State, or increases its holding of shares/voting rights in an undertaking (from 25% or less to more than 25% and from 50% or less to more than 50%).
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The cumulative value of transactions between the same parties in a 12-month period is equal to or greater than €2m.
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The same undertaking does not directly or indirectly control all the parties to the transaction (i.e. the transaction is not intra-group).
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The transaction relates to, or impacts upon, one or more of the critical sectors outlined in article 4(1) of the EU FDI Screening Regulation (the 2019 Regulation).
The Act is focused on the acquisition, by third country undertakings, of control ("decisive influence") or an increased stake in Irish companies, businesses and assets in certain critical sectors and industries. The transaction value threshold of €2m is low and is calculated on a cumulative basis across a 12-month period. The concept of a third country undertaking is broad, encompassing those engaged in an economic activity for "gain":
- any business or company registered/incorporated in a country outside the EU, the EEA (Iceland, Liechtenstein and Norway) or Switzerland
- any business or company controlled by a business/company or person registered/ordinarily resident in a country outside these jurisdictions
- any natural person ordinarily resident outside these jurisdictions, or an unincorporated group or partnership of natural persons where at least one is ordinarily resident outside these jurisdictions
- those "connected" to a business/company/person outside these jurisdictions, which includes the spouse, civil partner, parent, sibling or child of a person ordinarily resident outside these jurisdictions
The test to be applied when reviewing a transaction is whether or not the transaction affects or would be likely to affect the security or public order of the State. In reaching a decision on this issue, the Minister for Enterprise will be obliged to consider any comments submitted by the European Commission and any other EU Member State, as well as the views of a specially appointed advisory panel.
Transition period
A ten-day transition period is currently in place for transactions closing between 6-15 January 2025. Any transaction closing in this window, which meets the notification criteria, must still be notified. However, the Department's guidance indicates that there is no policy intent to suspend the transaction, or to conduct in-depth screening, unless a threat to security or public order is evident. Instead, the Department will review the notification form to ensure that it is complete and accurate. The suspensory regime will not apply unless the Department contacts the notifying party to state otherwise, which means that the closing can go ahead unaffected.
Next steps
The coming months will be crucial to informing our understanding of how the Irish regime operates in practice, including the volume and range of notifications being made and the speed with which the Department is able to process them.
Work is also expected to progress this year on a new EU Regulation on FDI screening (to replace the 2019 Regulation).
For more information on Ireland's FDI screening regime and how it might be relevant to your business, please get in touch with our EU, Competition & Procurement group, or your usual contact in our Corporate and M&A group.
