Foreign direct investment (FDI) Ogier Ireland Quarterly Update - October 2023

Foreign direct investment (FDI) has been a key pillar of Ireland's economic strategy for decades and has helped fuel economic growth in Ireland and the brand success of 'Ireland Inc.' since the mid-1990s. FDI remains key to Ireland's economic success, and today, Ireland is the most popular destination for FDI projects in the EU, when measured on a per capita basis.

In recognition of this, the Ogier team prepare a quarterly FDI newsletter which provides news, legislative updates, statistics and analysis relevant to FDI into Ireland. 

Welcome to the third edition of Ireland's FDI Quarterly Update.

In today's edition, our Irish Corporate team highlights all major legislative developments relating to foreign direct investment into Ireland and offers unique insight as to future updates.

Since our last update, it has been reported that a surge in life sciences investment that helped make Ireland the EU’s top performing economy in the past two years will continue. This was according to the Irish foreign investment authority IDA Ireland's chief executive, Michael Lohan. It seems the features that attract investment to Irish shores - as we highlighted in our previous update - will endure despite global changes including the proposed increase of the corporate tax rate to 15%, due to become effective in January 2024.

Enjoy this update.

EU's Digital Markets Act: an opportunity for smaller tech investments in Ireland?

As part of the same EU digital services package as the Digital Services Act, the Digital Markets Act (DMA) targets 'gatekeepers' of digital markets. On 6 September 2023, the European Commission formerly designated six gatekeepers for the purposes of the DMA being tech giants Apple, Alphabet (Google), Amazon, Meta, Microsoft and ByteDance (TikTok). The six gatekeepers will now have until March 2024 to ensure full compliance with the DMA obligations for each of their designated core platform services.

The DMA aims to ensure contestability and fairness in the digital market by imposing obligations on gatekeepers designed to curb anti-competitive practices and foster a fairer playing field for smaller tech companies, for which the DMA could provide a significant boost.

The obligations imposed on gatekeepers, from March 2024, include ensuring interoperability and data portability, preventing unfair practices, and providing more transparency in online advertising services. These measures are likely to reduce the dominance of gatekeepers and provide smaller companies with a fair chance to compete.

For investors eyeing the ever popular tech sector in Ireland, this regulatory shift could potentially open new avenues, particularly in relation to smaller tech prospects. As gatekeepers face increased regulatory scrutiny and changes to their business practices, smaller tech companies may find it easier to enter the market, innovate, and gain market share. This could lead to increased growth and profitability for them, potentially offering higher returns for investors.

However, this should be cautious optimism as smaller companies will need to strategise effectively in order to compete with the resources and brand recognition of established tech giants as the gatekeepers pivot to react to the regulatory shift.

Some differences between Ireland and the US in Irish mergers and acquisitions

The historical and cultural ties between Ireland and the United States have led to significant reciprocal investment. However, there are key differences in legal approaches between the two jurisdictions that US investors should be aware of, especially when Irish law governs transaction documents:

• In Ireland, damages from a breach of warranty are calculated based on the actual diminution of value of the target company's shares caused by the breach.
• The claimant under a breach of warranty in Ireland must prove the breach and is also under a duty to mitigate the loss.
• Most Irish M&A transactions provide for de minimis thresholds, under which no warranty claim will arise, which is uncommon in US M&A transactions.
• Many transaction documents and security documents in Ireland are routinely executed as deeds to avoid potential future arguments around the sufficiency of consideration and to extend the applicable prescription period from six years to twelve.

Stamp duty and share transfers: five key considerations

Upon the transfer of shares in an Irish company, stamp duty must be paid on the consideration for a sale of shares or the market value in the event of a gift pursuant to the Stamp Duties Consolidation Act 1999 (the 1999 Act). The obligation to pay stamp duty is on the purchaser of the shares and the standard rate is 1%.

Oisín McLoughlin, partner and Sharon Meaney, associate set out five key considerations when dealing with stamp duty in the context of a share transfer.

Stamp Duty and Share Transfers: five key considerations | Ogier

Ogier's Irish corporate team assists Cantor Fitzgerald in a €4.55m investment in Ireland's first ever premium whiskey eco-distillery

Ogier's Dublin-based Corporate team worked alongside Cantor Fitzgerald, Ahascragh Distillery and their advisors to secure up to €4.55 million of investment by way of the Employment Investment Incentive Scheme.

For more: Ogier's Irish corporate team assists Cantor Fitzgerald in a €4.55m investment in Ireland's first ever premium whiskey eco-distillery 

A refresher on the Prospectus Regime and MAR

The European Union legislative regimes created by the Prospectus Regulation (Regulation 2017/1129/EU) (Prospectus Regulation) and the Market Abuse Regulation (Regulation 596/2014) (MAR) should be borne in mind by companies investing or conducting business in European Union (EU) countries, to include Ireland.

Our corporate team have put together a refresher on this important piece of European legislation.

A refresher on the Prospectus Regime and MAR | Ogier

The increasingly influential role of private equity in Irish M&A

In this article which first appeared in Finance Dublin, partner in our Corporate team Oisín McLoughlin describes the strong expectation that deals between private equity players will increase in the Irish market in 2024.

The increasingly influential role of private equity in Irish M&A | Ogier

Establishing SPVs in Ireland for Structured Finance transactions

Ireland is the European jurisdiction of choice for locating special purpose vehicles (SPVs). Eoin Hamill and Laura Holtham from our Irish Banking and Finance team, with Michael Carroll, Head of Debt Capital Markets at Ogier in Ireland discuss establishing SPVs in Ireland for finance transactions.

Establishing SPVs in Ireland for Structured Finance transactions | Ogier

The Central Bank (Individual Accountability Framework) Act 2023 and its impact for Irish financial providers

The new Central Bank (Individual Accountability Framework) Act 2023 seeks to enhance the Central Bank's existing fitness and probity regime, and ameliorate individual accountability among financial service providers.

Partner Stephen O'Connor and senior associate Clodagh Buckley from our dispute resolution team in Ireland break down the Act and its significance for Irish finance.

The Central Bank (Individual Accountability Framework) Act 2023 and its impact for Irish financial providers | Ogier