Navigating Ireland’s New and Evolving FDI Regime: Key Insights for Dealmakers

Six months into Ireland’s FDI screening regime, we examine its implications for dealmaking and where risks are emerging.

In January 2025, Ireland implemented a formal foreign direct investment (FDI) screening regime for the first time. The move reflects growing EU-wide concerns over national security and public order, particularly in sectors such as critical infrastructure, advanced technology, and sensitive data.

Under the Screening of Third Country Transactions Act 2023, transactions involving non-EU/EEA investors acquiring significant interests in Irish businesses operating in designated “sensitive sectors” now require mandatory notification and clearance from the Investment Screening Unit of the Department for Enterprise, Trade and Employment.

Key Features of the FDI Regime

Below is a summary of the key features:

• Applies to non-EU/EEA investors acquiring directly or indirectly acquires control of an asset in Ireland, or changes the percentage of shares or voting rights that it holds in an undertaking in Ireland from below 25% to above 25% and from below 50% to above 50% in a “sensitive sector”
• “Sensitive sectors” include:
  • Critical infrastructure including energy, transport, water, health and data centres
  • Supply of critical inputs such as raw materials and chemicals
  • Sensitive data such as health data, personal data, or strategic information (including government data)
  • Critical technologies and dual use items as defined in Regulation 2021/821 such as AI, quantum and nuclear technologies, robotics and cybersecurity
  • Media and communication; for entities that influence editorial or public discourse
• The mandatory value threshold for a notification is €2,000,000; which applies to cumulative investments over a 12-month period
• Mandatory notification must be made before completion. The Minister retains the power to call in transactions for up to 15 months post-completion if they should have been notified
• Review may take up to 135 business days, with possible extensions
• Failure to notify can result in criminal penalties

Impact on Transactions

The FDI regime is already altering transactional dynamics. From a practical standpoint, deal teams are now:

• Including FDI approval as a condition precedent in SPAs where there’s non-EU capital involved in a sensitive sector, and notification thresholds are met
• Extending long-stop dates to accommodate potential review timelines
• Conducting regulatory risk assessments earlier in the M&A process, including informal engagement with the Department of Enterprise as a pre-notification strategy
• Considering indemnity protections where FDI issues are flagged
• In some cases, considering reverse break fees, for circumstances where regulatory approval is not obtained

Ireland vs the EU

Ireland’s FDI regime is still evolving and remains less developed than comparable regimes. For instance, France and Germany have more established enforcement histories and sector-specific guidance. The UK’s National Security and Investment Act has led to call-ins and blocked deals, with detailed annual reporting and policy updates.

In contrast, there is currently limited visibility on enforcement history in Ireland since the regime is new. The guidance published by the DETE in December 2024 has significantly improved clarity on procedural aspects and it is expected that trends on compliance and decision-making will become clear with the passage of time.

What Dealmakers Should Do

With the regulatory framework still evolving, it is essential to integrate FDI analysis into your early-stage cross border deal planning. In response to the grey zone created by limited enforcement visibility in Ireland, many acquirers particularly those in tech, infrastructure, life sciences, and data-heavy sectors are opting to file in compliance with the new regime. The trend is toward caution particularly where non-EU capital is involved.

We recommend:

• Screening for FDI exposure early, especially in strategic transactions in sensitive sectors
• Considering other regulatory compliance requirements, such as those under the already existing merger control regime, and building these requirements into transaction timelines
• Accounting for FDI clearance in transaction documents and conditions to closing
• Preparing for the possibility of delayed completion in sensitive sectors

Conclusion

Six months into the implementation of the FDI regime, its actual impact remains unclear. It is yet to be determined whether the regime will pose a significant regulatory challenge or remain largely procedural. However, the long-term effects should not be underestimated, as this new legal framework is robust and has the potential to significantly influence transaction timelines and structures.

How We Can Help

For specific advice on how Ireland’s FDI regime may affect your transaction, please feel free to contact Joe McVeigh in our Corporate Department (jmcveigh@bhsm.ie / +353 (0)1 440 8300).

This article is for general information purposes. Legal advice must be obtained for individual circumstances. Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.