Legislation is already in place in most EU countries, under which regulatory consent is required for certain transactions which may present perceived risks to the security or public order of that country. Such legislation is not yet in place in Ireland, but it is expected to be enacted shortly. The Screening of Third Countries Transactions Bill proposes to introduce a mandatory regime which will impose an obligation on all parties to a transaction in certain sensitive sectors, and which otherwise meets certain criteria for notification, to pre-notify the transaction to the Irish Minister for Enterprise, Trade and Employment at least 10 days before the transaction completes. Acquirers of or investors in Irish Healthcare businesses and/or companies should take careful note of this new requirement. Transactions in which the tests in the Bill are triggered will require a split signing and completion, with consent to be achieved before the transaction can complete.
Earlier this year, certain amendments were made to the Bill, which continues to work its way through the Irish legislative system. It is anticipated that the Bill will now be enacted in the first quarter of 2024, though it could be enacted in the final quarter of 2023. We summarise some of the key aspects of the proposed legislation stakeholders in the Healthcare sector should be aware of.
Scope of the key amendments
A mandatory notification will be required where:
- A Third Country Undertaking, or person connected with such an undertaking, as a result of the transaction:
- Acquires control of an asset in the State, or
- Changes the percentage of shares or voting rights it holds in an undertaking in the State, from 25% or less to more than 25% / from 50% or less to more than 50%
- The value of the transaction must be at least €2 million in a period of 12 months, note that to date no guidance has been issued on how the value of a transaction criteria is to be calculated., and
- The transaction relates to, or impacts on one or more of the following sensitive sectors, namely:
- Critical technologies and dual-purpose items
- The supply of critical inputs
- The access to sensitive information
- The freedom of pluralism of the media, and
- In particular, for current purposes critical infrastructure
Critical infrastructure, in this context, refers to physical or virtual, including:
- Data processing or storage
- Electoral or financial infrastructure
- Sensitive facilities, and
- Land and real estate crucial for the use of such infrastructure
A Third Country Undertaking essentially means:
- An undertaking constituted or otherwise governed by the laws of a country outside the EU, the EEA and Switzerland
- A third country national, i.e. a person ordinarily resident in a country referred to in (a) above, or
- An undertaking controlled by at least one director, partner, member or other person that is a person referred to in (a) or (b) above.
The Minister is required to make a screening decision within 90 days from the date on which the screening notice for the transaction is issued. The 90-day review period may be extended to 135 days at the discretion of the Minister.
The Minister has a broad discretion to review transactions regardless of whether they are notifiable or notified if the Minister has reasonable grounds for believing that they could affect, or would likely affect, the security or public order of the State.
However, this right of review ceases, in the case of non-notifiable transactions, where more than 15 months has passed since the transaction was completed, and where, in the case of a notified or notifiable transaction, it is completed more than “15 months before [this section] comes into operation”.
Therefore, in theory, relevant transactions which have recently completed or will be completed in the coming months could be reviewed by the Minister if the legislation is enacted and commenced as currently planned.
It is a criminal offence under the Bill to complete, or take steps to complete, a non-notified transaction or a notified transaction under review by the Minister prior to the Minister issuing a screening decision clearing the proposed transaction or making it subject to conditions. Where the transaction is subject to a conditional screening decision, it is an offence to complete the transaction other than in accordance with those conditions.
A person guilty of an offence under the relevant legislation on foot of the Bill will be liable on summary conviction of a fine of an increased amount of €5,000, and/or up to 6 months imprisonment, or a fine of up to €4,000,000, and/or up to 5 years imprisonment, upon conviction on indictment.
There remain many aspects of the Bill for which further guidance will be required. This is expected to be provided over the coming months. We will continue to provide a further update in the coming months when hopefully we will have greater clarity on how the legislation will operate.
The content of this article is provided for information purposes only and does not constitute legal or other advice.