IRELAND Law and Practice Contributed by: Enda Garvey, Brian McCloskey and Robert Maloney Derham, Matheson LLP
to transpose the ‘stop the clock’ delay became law in July 2025. Private equity firms with larger portfolio companies are also considering the impact of the Corporate Sus - tainability Due Diligence Directive (CS3D), which was also amended by the European Commission’s ‘Omni - bus’ proposals, and will begin to apply to the largest companies in 2028. Under this new regime, in-scope companies (and, indirectly, certain of their customers and suppliers) will be required to incorporate sustain - ability due diligence into their operations and strategy. In terms of Irish-specific ESG legislation, portfolio companies and sponsors should be aware that Ire - land has specific gender pay gap reporting, which is separate from and in addition to the EU’s Pay Trans - parency Directive. Due diligence is usually carried out by the buyer’s legal advisers. Typically, the buyer’s lawyers share a due dil - igence questionnaire (DDQ) with the seller’s lawyers, which will contain a list of questions for them. These are usually categorised under a number of headings, including: • accounts; • data protection; • employment and pensions; • financial arrangements; • intellectual property; • key contracts; • litigation and disputes; • real estate; • regulatory and sanctions; • ESG; • share capital and corporate structure; and • tax. The buyer’s lawyers will also request documents from the seller’s lawyers. The seller will then upload these documents to a virtual data room (VDR), to which the buyer, seller and their respective advisers have access. 4. Due Diligence 4.1 General Information
The seller’s lawyers will respond to the questions raised in the DDQ. This allows the buyer’s lawyers to raise follow-up questions and/or request that further documents be uploaded to the VDR. The buyer’s lawyers draft a legal due diligence report addressed to the buyer, outlining the issues identified during the due diligence exercise and advising as to how they can be dealt with. The buyer’s lawyers typi - cally have detailed instructions regarding the scope of the due diligence (and the materiality threshold to be applied); the report will only address issues within this scope. In recent years, areas such as data protection – and, in particular, General Data Protection Regulation (GDPR) compliance – have been given very high priority in the due diligence process, owing to the potential for punitive penalties arising from breaches of the GDPR. In May 2024, the EU Council approved the EU Artificial Intelligence Regulation (“AI Act”), which marked the final step in the EU legislative process. The AI Act will have a staggered implementation over the next three years. The AI Act is broad in scope and is expected to become increasingly important in legal due diligence, given the substantial penalties for non-compliance with obligations. In addition, there has been a large focus on pensions arrangements and ESG issues as part of legal due diligence, due to changes to legislation affecting pri - vate pensions schemes and various ESG regulation (as discussed in 3.1 Primary Regulators and Regula- tory Issues ). 4.2 Vendor Due Diligence While there has a been an observable trend towards more bilateral deals, private equity sellers continue to favour sales by auction. A vendor due diligence (VDD) report is typically part of an auction process and involves the vendor providing a report or legal fact book that describes the business and any poten - tial impediments to an acquisition. These are typically provided on the basis of a specified scope of review and include analysis of limited aspects (eg, change of control provisions in commercial contracts). The
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