Janina White
New legislation enacted in Ireland at the end of October is set to expand regulatory screening for corporate transactions, including mergers and acquisitions. The Screening of Third Country Transactions Act 2023, aligning with the EU Screening Regulation, is scheduled to take effect in the second quarter of 2024. As an Irish lawyer and solicitor in England and Wales, I highlight the transformative impact of this legislation on the landscape of Irish transactions.
The legislation introduces a mandatory notification regime, compelling parties involved in transactions with investors from third countries to assess potential filing obligations. Even transactions already in progress, expected to conclude post-implementation, must undergo review periods. Parties contemplating such transactions are advised to proactively plan for the notification requirement, ensuring that legal documentation incorporates essential language.
The Screening of Third Country Transactions Act 2023
The Act addresses security and public order concerns arising from foreign investments, equipping the state with powers to monitor and respond to potential threats. One crucial aspect of the Act is the establishment of criteria to determine notifiability. Transactions meeting certain conditions, such as a cumulative value of at least €2 million or involving 'sensitive and strategic activities' categorized in the EU Screening Regulation, trigger the mandatory notification requirement.
'Sensitive and strategic activities' encompass critical infrastructure, including energy, transport, water, health, and defense, as well as critical technologies such as artificial intelligence, cybersecurity, and biotechnologies. Transactions impacting the supply of critical inputs like energy, raw materials, and food security, along with those affecting access to sensitive information and media freedom and pluralism, fall under the criteria.
Notification becomes mandatory when, upon completion, a third-country party gains control of an Irish entity or asset, exceeding specified thresholds (from less than 25% to over 25%, or from less than 50% to over 50%). Notably, the UK and the US are considered third countries under this legislation, emphasizing the legislation's global reach.
Parties must submit notifications at least 10 days before completing the transaction, with internal reorganizations being the only exception to this requirement. The minister for enterprise, trade, and employment will review notifications promptly, making a screening decision within 90 days or 135 days with an extension. The minister can authorize, condition, or prohibit transactions believed to affect national security and public order.
Completion of a notifiable transaction before the minister's clearance decision is a criminal offense, as is deviating from specified conditions. Possible conditions include divestment, behavioral requirements, ring-fencing, or reporting obligations. Parties can appeal screening decisions to an independent adjudicator, with further appeal rights to the High Court on points of law.
The Act grants the minister 'call-in' powers to scrutinize notifiable and non-notifiable transactions if there are reasonable grounds to believe they impact national security and public order. For transactions initiated but not completed before the Act's commencement, compliance requires providing necessary information within 30 days of completion.
Summary of Key Points
The Screening of Third Country Transactions Act 2023, implementing the EU Screening Regulation, will impact corporate transactions in Ireland.
The legislation introduces a mandatory notification regime for transactions involving third-country investors, necessitating proactive planning and inclusion of specific language in legal documentation.
Criteria for notifiability include a cumulative transaction value of at least €2 million and involvement in 'sensitive and strategic activities.'
'Sensitive and strategic activities' encompass critical infrastructure and technologies, impacting areas such as energy, transport, AI, and cybersecurity.
The Act applies to transactions where a third-country party gains control of an Irish entity or asset, with notification required at least 10 days before completion.
The minister has the authority to review and make screening decisions within 90 days, with criminal offenses for completing notifiable transactions without clearance.
The Act grants the minister 'call-in' powers for scrutinizing transactions affecting national security and public order.
Compliance is required for transactions initiated but not completed before the Act's commencement, emphasizing its impact on Ireland's attractiveness for international transactions.
Janina is a solicitor registered in England and Wales, and the Republic of Ireland, and a member of the American Bar Association. Her extensive legal expertise spans Corporate Law, Sanctions, and Corporate Governance. Beyond law, Janina is a Chartered Company Secretary and showcases a passion for global cultures, evident in her fluency in eight languages. Advising multinational giants, her unique blend of legal acumen and cultural insight sets her apart, offering readers a rich, global perspective on her subjects. Janina is also a private investigator and a member of the Association of British Investigators and she is actively using the investigative techniques (including the use of the Artificial Intelligence, OSINT and HUMINT) in her legal work. You can contact Janina by email janina@walaw.uk.