The Irish Government has given the green light for the publication of a new law for a foreign investment screening regime, which will allow Ireland to review investments made by non-EU companies and governments for the first time. 

Scope of the new regime 

The regime will enable Ireland’s Minister for Enterprise, Trade and Employment to review foreign investments in sensitive or critical infrastructure, including Ireland’s health services, electricity grid, military infrastructure as well as ports and airports, where the transaction value is €2 million or more (this threshold can be reviewed and revised by the Minister if required). 

When considering a particular foreign investment, the Minister will need to take into account a number of factors, including the threat posed to Ireland’s security or public order by the acquisition; the type of control being acquired; and any risk associated with the acquirer. 

Powers provided by the regime will include the ability to prohibit investments deemed to threaten Ireland’s national security or public order. Punitive measures will include fines of up to €4 million or imprisonment for those falling foul of the new rules. An appeals process will be available for those who disagree with a decision to prohibit their investment. 

The regime will also facilitate better information- sharing and cooperation with other EU Member States. In fact, the legislation has been developed partly in response to the EU Investment Screening Regulation (EU) 2019/452, which is in turn a response to the growing concerns from Member States regarding the purchase of strategic European companies by foreign-owned firms, and in certain cases, State-owned firms (read more about this here).

A long time coming  

The wheels on a potential Ireland-specific foreign investment regime began turning back in 2020, when Ireland’s Department of Enterprise, Trade and Employment held a public consultation on the country’s implementation of the EU Investment Screening Regulation. Following the consultation, the Irish Government agreed to draft legislation and key topics were approved in July 2020. However, publication of the legislation was subsequently delayed due to the Covid-19 pandemic and also the enactment of the Competition (Amendment) Act 2022. 

It is currently expected that the text of the legislation will be published by the end of summer 2022 and enacted in early 2023.

Given Ireland’s historical attractiveness as a place for foreign investment, this new regime will likely have an impact on a large number of transactions with an Irish nexus.