The much-anticipated legislation introduces Ireland’s first ever investment screening regime. It will enable the Minister for Enterprise, Trade and Employment to review certain transactions involving acquisitions by third country undertakings that may affect the security or public order of the State. Third countries are countries outside the EEA and Switzerland, ie including, but not limited to, the United Kingdom and the United States.
The Minister’s review powers
Transactions which meet the criteria set out in the Act will require mandatory notification to the Minister. The Minister has the power to ‘call in’ for review any notifiable transaction that has not been notified.
The Minister may also ‘call in’ a transaction which is not notifiable where the Minister has reasonable grounds for believing the transaction affects, or would be likely to affect, the security or public order of the State. The Minister may exercise this call in power retroactively:
- Where the transaction is completed within 15 months prior to the commencement of the relevant provisions of the Act
- Where the transaction is not notifiable, within 15 months from completion
- Where the transaction is notifiable but has not been notified, within the later of 5 years from completion or 6 months from the Minister becoming aware of the transaction.
Mandatory and suspensory notification regime
Transactions required to be notified to, or called-in for review by, the Minister are not permitted to complete until the Minister issues a screening decision clearing the transaction, with or without conditions. Transactions meeting the following criteria are required to be notified to the Minister:
- A third country undertaking, or a person connected with that undertaking
- Acquires control of an asset or undertaking in the State, or
- Changes the percentage of shares or voting rights it holds in an undertaking in the State from 25% or less to more than 25% or from 50% or less to more than 50%
- The cumulative value of the transaction and each transaction between the parties to the transaction (or connected persons), in the 12-month period before the transaction, is at least €2 million
- The transaction is not an internal re-organisation whereby the same undertaking directly or indirectly controls all the parties to the transaction, and
- The transaction relates to, or impacts upon, one or more of the matters referred to in Article 4(1) of the EU Screening Regulation (namely, critical infrastructure, critical technologies and dual use items, the supply of critical inputs, access to sensitive information, and freedom and pluralism of the media)
It is important to note that the obligation to notify rests on all parties to a transaction meeting the relevant criteria unless they are not aware of the transaction.
Impact on deal timelines
The mandatory and suspensory notification regime has the potential to significantly delay the completion of notifiable and called-in transactions.
The Minister has 90 calendar days from the date on which the screening notice is issued to make a screening decision. This 90-day review period may be extended to 135 days at the discretion of the Minister. In addition, the Minister may issue a notice of information, which suspends the review period until the date on which the notice is complied with.
Conclusion
Investors in Ireland will be familiar with Ireland’s well-established merger control and media merger regimes. Ireland’s new investment screening regime adds another layer of regulatory complexity for investors wishing to do business in Ireland.
To minimise the potential delays to closing brought about by these mounting regulatory hurdles, parties to transactions involving assets or undertakings in the State should start thinking now about key questions, such as:
- Does the transaction meet the criteria for a mandatory screening notification to the Minister?
- Should provision be made in the deal documentation for a potential notification?
- What is the potential impact on the deal timeline of a notification?
- What remedies could be offered to address any public order and/or security concerns?
- If the transaction is not mandatorily notifiable, has already closed, or is likely to close prior to commencement of the Act, is it at risk of being called-in for review by the Minister?
For more information and expert guidance on the implications of the Act on your transaction, contact a member of our Competition & Antitrust team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.