Background

At present, Ireland does not screen FDI, nor is the State currently legally empowered to do so. However, due to the outbreak of COVID-19, implementation of an investment screening regime has now taken priority at a European level.

The Regulation, which was adopted in April 2019 and comes into force on 11 October 2020, is a response to growing concern amongst EU Member States regarding the purchase of, and investment in, a number of strategic European companies by foreign owned firms (and in certain cases, state owned firms) that may undermine a Member States’ security or public order. The Regulation introduces minimum rules for those countries that choose to do so and obliges all Member States to have a national contact point to enhance communication and cooperation and to receive and respond to queries from the European Commission or other Member States.

On 13 September 2020, the Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar TD (the “Minister”) announced that the government has agreed to draft legislation which will give effect to the Regulation in Ireland. The Investment Screening Bill 2020 will provide the Minister with the power to assess, investigate, authorise, condition, prohibit or unwind foreign investments from outside of the EU, based on a range of security and public order criteria.

At present, 14 Member States have investment screening rules, including France, Germany and the United Kingdom with varying approaches taken by each country with regards to issues such as voluntary/mandatory regimes and the threshold level which trigger the rules. In general, screening regimes require third country firms to provide regulators with basic information regarding the investment, including details of its structure and the source, value and timing of the investment together with details of the products/services involved. When the Investment Screening Bill is introduced, investors should expect to be obliged to provide this type of information. Depending on the structure of the screening process ultimately adopted in Ireland, there may be costs and timeline implications for transactions which fall within the jurisdiction of the new screening regime.

A further update will be provided on the approach to be adopted by Ireland following the publication of the Investment Screening Bill 2020.