Key Features of Ireland’s First Investment Screening Regime
The state’s first investment screening regime is one of the most significant developments in the Irish M&A arena in recent years, writes Tara Kelly, Head of Competition & Antitrust at Mason Hayes & Curran LLP
The Screening of Third Country Transactions Bill 2022 proposes to introduce the state’s first investment screening regime. Once enacted, the government will have the power to review certain transactions for potential risks to the security or public order of the state. The Bill is anticipated to be enacted in early 2023.
The Bill provides for a mandatory and suspensory notification requirement for transactions meeting the following criteria:
A ‘third country undertaking’ (i.e. a person or an undertaking from outside the EEA and Switzerland), or a person connected with such an undertaking, is a party to the transaction.
The value of the transaction is at least €2m.
The transaction directly or indirectly relates to, or impacts on, one or more of the following matters referred to in the EU Screening Regulation: critical infrastructure, whether physical or virtual; critical technologies and dual use items; supply of critical inputs; access to sensitive information; freedom and pluralism of the media.
The transaction relates to an asset or an undertaking in the state. Where there is an acquisition of shares or voting rights in an undertaking, the percentage of shares or voting rights exceeds 25% or 50%.
The other key features of the Bill include:
Multi-party obligation to notify:
All parties to a transaction meeting the relevant criteria are required to
notify, unless they are not aware of the transaction.
‘Call in’ powers: The Minister for Enterprise, Trade and Employment may ‘call in’ for review transactions regardless of whether they are 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.
Deadline to notify: Notification must be made not less than 10 days prior to completion of the transaction.
Offence of gun-jumping: It will be a criminal offence to complete, or take steps to complete, a transaction under review by the minister prior to the minister issuing a screening decision clearing the proposed transaction.
Information requests: The minister may issue a notice of information. Failure to comply is a criminal offence.
Review timeline: The minister must make a screening decision within 90 days from the date of notification.
This may be extended to 135 days at the discretion of the minister. The review period is suspended by the issuance of a notice of information and resumes on the date that the notice is complied with.
Remedies: The minister may prohibit the transaction, or parts of it, or impose conditions such as divestment requirements or behavioural requirements.
Criminal sanctions: Persons found guilty of an offence may be liable to fines and/or imprisonment.
Appeals: Parties to a transaction may appeal a screening decision to an independent adjudicator.
CONCLUSION
The Bill has the potential to cast a wide net. Although its enactment is likely several months away, parties to a transaction involving a person or an undertaking from a third country should start thinking now about key questions, such as whether the transaction meets the mandatory notification criteria, and the potential impact on the deal timeline.