18 December 2024
The law impacts almost everyone in business. So what do you need to be aware of for the year ahead in terms of how it might affect you and your company?
In 2025 the legal landscape will continue to evolve at pace, bringing opportunities and challenges across all sectors. Our KPMG Law professionals offer insights into key developments and trends that businesses need to be aware of.
The Irish M&A market showed resilience once again in 2024. After a cautious start to the year in terms of deal volume, the second quarter of 2024 highlighted the robust nature of the Irish M&A market.
Looking ahead to 2025, several leading indicators suggest a positive outlook for Irish M&A activity. According to the Economic and Social Research Institute, growth is anticipated in Modified Domestic Demand (MDD) and GDP, with MDD expected to grow by 2.5% and GDP by 2.3%, providing a strong economic foundation for increased deal-making. Additionally, the global M&A landscape is showing signs of recovery, particularly in the US, where M&A activity has been on the rise.
Overall, we are optimistic for the M&A outlook with evidence of gathering pace and a backlog of deals beginning to come to market.
We expect imminent new regulation to create some uncertainty in terms of deal timelines. Moreover, it may slow the pace of transactions as parties adapt to increased due diligence scopes to comply with an increasingly complex regulatory framework. At the same time, the adoption and growing trust in tech-enabled, and specifically AI-enabled, solutions will tend to create speed and efficiency in transactions.
2025 will see a number of key dates, with February seeing a prohibition on certain types of AI coming into effect and the start of a literacy regime for employees working with AI. There will also be further guidance issued in respect of High-Risk AI systems.
In May 2025, codes of practice for General Purpose AI (“GPAI”) will need to be ready. The current process in this regard sees industry working with regulators, which is welcome. There will be a particular emphasis on documentation being clear and transparent. Codes of practice will apply to GPAI as of August 2025 and EU member states will need to have established a competent authority which will work with the EU AI Office. The EU AI Office will also commence a review into the functioning of the AI Act, one year on from its commencement.
It's clear that organisations in 2025 will need to keep a close eye on the relevant codes of practice and other AI Act derived regulations affecting their industry/sector. Additionally, compliance with the General Data Protection Regulation and all related data protection laws remains a critical component in this area.
The Automatic Enrolment Retirement Savings System Act 2024 (the “AE Act”) provides for a new retirement savings scheme for employees who are not already part of a pension related regime. Certain employees will be considered to be in ‘exempt employment’, whereby the employer or employee is already contributing to certain schemes which fulfil the requirements of the AE Act. There is currently no minimum standard (including contribution rates) applicable to exempt employment, however the Minster for Social Protection is obliged to set these standards between year 7 and year 9 following commencement.
Employees aged between 23-60 and earning more than €20,000 per year will be automatically enrolled into the scheme, and those falling outside the age limitations can opt into the scheme. Those who are automatically enrolled, can opt out of the scheme six months after they have been enrolled/re-enrolled. Only the employees’ contributions can be refunded if the opt-out is availed of.
Employer contributions will begin at 1.5% of annual salary for the first three years and will increase by this same percentage to a maximum of 6% at year 10. The State will also be obligated to contribute at a rate of 0.5% for the first three years, increasing to 2% at year 10.
The AE Act is a major change in the pensions landscape in Ireland. Employers, once notified by the National Automatic Enrolment Retirement Savings Authority of employees being enrolled, must facilitate this, and commence contributions.
This new regime is due to commence 30 September 2025.
Employers can continue to facilitate access to their occupational pension schemes and/or PRSAs, and in parallel to this, respond to the AE Act obligations in due course.
However, it may be prudent for employers to act in terms of performing business and workforce impact analysis i.e. assessing their workforce by age, salary and current retirement arrangements, including costs associated with contributions and administration of existing schemes. This analysis will help determine if it is possible to extend existing arrangements to all employees and whether employers should pro-actively encourage employees with no financial retirement arrangements to avail of existing pension related benefits.
In 2025, the issue of ensuring compliance with ESG reporting obligations will remain a significant challenge for companies. Increased obligations mean companies must avoid any potential claims of greenwashing through statements made in respect of their ESG policies.
The European Commission has taken a proactive stance with its proposal for the Green Claims Directive ("GCD"), aiming to ensure environmental claims are reliable, comparable, and verifiable, addressing vague and misleading sustainability statements that undermine consumer trust.
The GCD requires companies to substantiate their environmental claims with robust, science-based evidence, verified by independent third parties. This move protects consumers from deceptive practices and promotes a level playing field for businesses committed to genuine sustainability efforts.
For companies, the implications of greenwashing are profound. Misleading sustainability statements can damage corporate reputation, pose legal and regulatory risks, lead to litigation, and result in a loss of consumer trust.
KPMG Law can help to ensure that you understand the legislation and your obligations as the costs and reputational damage resulting from non-compliance can be significant.
The Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 introduces significant amendments to the Companies Act 2014, aimed at modernising corporate governance and enforcement mechanisms in Ireland.
Key updates, the majority of which will be commenced in 2025, include:
These updates reflect a commitment to enhancing corporate governance and regulatory compliance in Ireland, and companies need to be cognisant of both the potential consequences, and the opportunities, that the changes will bring.
In the financial services sector, 2025 will see the introduction of many important legislative and regulatory changes and updates, including:
Companies in the financial services sector must be not just aware of the above legislative and regulatory changes, but in many instances proactive preparation is required in order to ensure compliance.
2025 promises to be another exciting and dynamic year for the law of corporate structuring. Here are some of the major developments and trends to be aware of:
These trends and developments will affect a wide range of companies and entities, and KPMG Law is well-positioned to assist in navigating the compliance challenges posed, and to help you capitalize on emerging opportunities.
The Screening of Third Country Transactions Act 2023 (the “IIS Act”) is expected to commence in the early part of January 2025 according to the Department of Enterprise, Trade and Employment (“DETE”). This landmark legislation was derived from EU Regulation 2019/452, which established a framework for screening foreign direct investments into the European Union. This Inward Investment Screening (“IIS”) allows DETE to examine and assess direct investments which involve investors from outside of the EU, EEA and Switzerland.
A transaction must fall within any one of five “Critical Areas” and involve the acquisition of assets, shares or any economic activity that results in a change of control of an asset or undertaking within the state. The cumulative value of the transaction, and each transaction between the parties, in the 12 months prior to the transaction is at the low end of the scale at €2 million, however the transaction does not need to be notified if the same undertaking controls all of the parties to the transaction (i.e. an internal reorganization).
DETE may authorise, block or allow the investment upon certain conditions being met (e.g. divestment of a particular part of the business). Importantly, there is a “look-back” provision, which allows the Minister of Enterprise, Trade and Employment to review any transactions which took place in the 15 months prior to the IIS Act becoming law, which means that any qualifying transactions which took place before the Act’s implementation should be notified to DETE upon enactment.
If parties complete, or take steps to complete, a notifiable transaction without Ministerial consent, that is an offence under the IIS Act. Summary conviction under the IIS Act could lead to fines up to €4 million, or up to five years imprisonment.
These penalties will also apply in cases where a party is found to be providing false information. This IIS mechanism will require that both parties in an acquisition or investment transaction with a third country actor consider whether their transaction will notifiable, and if so, to build the notification into their timeline, and possibly the deal documentation. Transactions which took place within the past 15 months, should also be analysed to see if they fall within the criteria, and if so, a notification should be provided to DETE.
At KPMG Law, our experienced subject matter experts (together with our network across our EU member firms) are here to provide you with expert tailored advice so you can better understand and address the challenges that the new year will bring.
Navigating the complexities of an ever-changing legal landscape requires clear guidance and strategic planning. Reach out to us to discuss how we can help you achieve your goals for 2025 and beyond.
