Welcome to the Q1 2025 edition of our Life Sciences Sector Update series. In this issue, we examine a selection of topics and trends impacting our clients during the course of the coming year.
First up, Planning & Environment partner Jay Sattin explores the new EU Batteries Regulation and its stringent compliance requirements. He breaks down which batteries are affected, key sustainability and safety obligations, and essential steps for manufacturers, importers, and distributors. Learn how these rules could impact your business and why early compliance planning is crucial.
Some of our featured articles include:
• Pharma to Help Fund the Treatment of Micropollutants
• High Court Fails to Make Findings of Fact
• Company Law Reforms Affecting the Life Sciences Sector
• Converting Offices to Life Sciences Spaces: Top Considerations
Should you wish to discuss these topics or any other issues impacting your organisation, please contact a member of our Life Sciences Sector team.
Key Contacts
Michaela Herron Partner, Head of Life Sciences mherron@mhc.ie
Martin Kelleher Partner, Corporate mkelleher@mhc.ie
Contact our Life Sciences Sector team
Batteries Regulation in MedTech
Navigating the new compliance landscape
Jay Sattin
Partner, Planning
& Environment
+353 86 078 8295
jsattin@mhc.ie
The importance of batteries to medical technology cannot be overstated. Implantable medical devices are powered by batteries. Substantial volumes of other medical equipment also rely on batteries either as their main or back-up power source.
The EU Batteries Regulation aims to ensure that batteries on the EU market are sourced and manufactured in a sustainable manner. The Regulation sets out, amongst other things, rules on the sustainability, performance, safety, collection, recycling and second life of batteries.
It is important that manufacturers, importers, distributors, or any person placing batteries on the EU market or putting them into service are aware of their obligations under the Regulation. While the Regulation applies to all battery categories, this article focuses on its implications for producers of “portable batteries,” which are most commonly used in medical devices.
In-scope batteries
Broadly speaking, a battery includes nonrechargeable or rechargeable battery cells or packs of them, as well as batteries that have been re-used, repurposed or remanufactured. Portable batteries must be sealed, weigh 5kg or less, and not be a different category of battery covered by a separate provision of the Regulation.
The Regulation also applies to certain types of ‘battery management systems’, which control certain functions within a battery.
David
Foy Associate, Planning & Environment
+353 86 167 3086
dfoy@mhc.ie
Producers
The Regulation uses the term ‘producers’ to describe persons who have obligations under the regime. The term ‘producer’ includes:
• Manufacturers
• Importers
• Resellers, and
• Distance sellers
Many of the obligations become applicable at the point the batteries are first placed or put into service on the EU market. This extends to producers of medical devices that incorporate batteries. However, if a producer places battery-operated medical devices on the market without the batteries being incorporated into the device at the time it is placed on the market, they may not have obligations under the Regulation. Instead, the obligations would apply to the battery producer that separately places the required battery on the market. If, on the other hand, a producer of a medical device incorporates a third-party’s battery into the device, the producer of the medical device may have obligations under the Regulation.
Obligations on producers
The primary obligation under the Regulation is that batteries placed on the market or put into service shall not present a risk to:
• Human health
• Safety of persons
• Property, or
• The environment
However, the Regulation provides more specific obligations regarding ‘sustainability and safety requirements’ and ‘labelling and information requirements’. We summarise some of these requirements for portable batteries that may be of interest to producers of medical technology.
1. Restrictions on substances
The use of certain substances in the production of batteries is restricted. The Regulation provides that batteries shall not contain more than 0.0005% mercury, 0.002% cadmium, and 0.01% lead, measured by weight. Further restricted substances are set out in Annex XVII of Regulation 1907/2006 and in Article 4(2)(a) of Directive 2000/53/EC. This restriction is in effect.
2. Performance and durability requirements
Portable batteries for general use, excluding button cells, must meet minimum values for the electrochemical performance and durability. These parameters are set out in Annex III of the Regulation. The minimum values will be set out in a delegated act to be adopted by the Commission by no later than 18 August 2027.
The parameters to which the minimum values will apply include things such as rated capacity, resistance to unplanned escape of material, and the capacity a battery can deliver under specific conditions.
This obligation will apply from 18 August 2028. However, this date could potentially be pushed by the Commission in a delegating act.
3. Removability and replaceability of portable batteries
Portable batteries incorporated into products must be readily removable and replaceable by the enduser at any time during the lifetime of the product. This only applies to entire batteries and not to individual cells or other parts included in portable batteries.
A portable battery is considered “readily removable by the end-user” if it can be removed from a product using commercially available tools. Specialised tools are not required, unless they are provided free of charge with the product. However, there is an exemption for appliances including “professional medical imaging and radiotherapy devices” and “in vitro diagnostic medical devices”.
Although this requirement is in effect, the Commission will ultimately publish guidelines so that there is a harmonised approach on its application throughout all Member States.
4. Labelling and marking of batteries
Batteries must bear a label containing the general information set out in Part A of Annex VI. This information includes things such as details on the manufacturer, date of production, and battery information. This obligation will apply from 18 August 2026. However, this date could potentially be pushed out by the Commission in a delegating act.
In addition, all batteries must bear the “crossedout wheelie bin” symbol from 18 August 2025. This indicates that batteries are to be disposed of in a separate waste stream to regular waste.
5. CE marking
The Regulation establishes a framework for conformity assessment procedures for batteries. Battery manufacturers are required to prepare a declaration of conformity in electronic format since 18 August 2024. This document must be provided in the language(s) specified by each Member State where the batteries are being marketed.
By drawing up the declaration of conformity, the manufacturer assumes responsibility for the compliance of the battery with the requirements laid down in the Regulation. It is not sufficient to simply add the Regulation to an existing declaration of conformity.
Conforming batteries must be visibly, legibly, and indelibly marked with the CE marking before the battery is placed on the market. If it is not practically possible for the marking to be on the battery, then the marking must be on any packaging and documents accompanying the battery. The general rules on how to affix the CE marking to a product, including portable batteries, are available in the Commission’s Blue Guide on the implementation of EU Product Rules 2022.
6. Management of waste and producer responsibility
Producers of portable batteries must ensure that all waste portable batteries are collected separately from other waste. This requires producers to:
Establish a waste portable battery take-back and collection system
Collect, free of charge, the waste portable batteries collected at collection points, and
Ensure that the waste portable batteries collected are subject to treatment in a permitted facility by a waste management operator
Producers of portable batteries must attain, and maintain on an ongoing basis, at least the following collection targets for waste portable batteries:
• 45% by 31 December 2023
• 63% by 31 December 2027, and
• 73% by 31 December 2030
7. Due diligence and risk management
Producers having a net annual turnover of €40 million or more have additional obligations under the Regulation. These producers are referred to as “economic operators”. Economic operators must implement battery due diligence policies from 18 August 2025. These policies must be third-party verified. The Commission is to publish guidelines on the requirements of due diligence policies by 18 February 2025.
Comment
In addition to the provisions already in force, the many other provisions of the Regulation will come into force on a gradual, phased basis over the next 12 years or so. The European Commission and Member States will implement secondary legislation to give full effect to the Regulation.
Specific obligations for manufacturers, importers and distributors of batteries are set out in Articles 38, 41, and 42 of the Regulation. Broadly speaking, they are required to ensure compliance with the other provisions of the Regulation.
For more information on the impact of the Regulation on your operations, contact a member of our ESG or Environment teams.
Pharma to Help Fund the Treatment of Micropollutants
Jay Sattin Partner, Planning & Environment
+353 86 078 8295
jsattin@mhc.ie
Ireland will be required to establish an extended producer responsibility (EPR) Scheme by 31 December 2028 to fund the enhanced treatment of micropollutants. As part of the Scheme, producers that place certain medicinal or cosmetics products on the Irish market must contribute to the treatment costs. These requirements have been adopted in a revision to the Urban Waste Water Treatment Directive[1] (the Revised Directive). Ireland must transpose the Revised Directive by 31 July 2027.
The EU has targeted the pharmaceutical and cosmetics industries, as it considers that they are the main source of micropollutants in urban wastewater. However, these industries anticipate the costs will be prohibitively and disproportionately expensive. The EU, on the other hand, says the potential increase of costs of products, or the potential reduction of profit margins for producers, will be marginal at EU level. It believes this will not endanger the affordability, availability, or accessibility of these products on the EU market.
Additional pollutants
The Revised Directive extends the scope of the Directive to a greater amount and type of pollutants. It includes:
• Heavy metals
• Microplastics
• Micropollutants, and
• Other chemicals such as per- and polyfluoroalkyl substances (PFAS)
David Foy Associate, Planning & Environment
+353 86 167 3086
dfoy@mhc.ie
The Recitals to the Revised Directive state that recent scientific evidence highlights PFAS as an environmental and public health concern. Their persistence in the environment contributes significantly to this issue. Understanding the ways in which PFAS can enter the environment is a priority aim of the Revised Directive. To achieve this, Member States will be required to monitor PFAS at the inlet and outlet of waste water treatment plants (WWTPs).
Quaternary treatment
Under the Revised Directive, Ireland will have to apply an additional treatment to certain urban wastewater discharges to meet specified levels for the removal these pollutants. This treatment is known as ‘quaternary treatment’, ie a process which reduces a broad spectrum of micropollutants in urban wastewater.
The EU has prescribed the targets on the basis of the “precautionary principle” in combination with a risk-based approach. The targets to be achieved for urban WWTPs having a load of at least 150,000 population equivalent are as follows:
• 31 December 2033 for discharges from 20% of those urban wastewater treatment plants
• 31 December 2039 for discharges from 60% of those urban wastewater treatment plants, and
• 31 December 2045 for all discharges from those urban wastewater treatment plants
Ireland must establish a list of “sensitive areas” where the concentration or the accumulation of micropollutants from urban wastewater treatment plants pose a risk for the environment or human health. The deadline for this list is 31 December 2030. The designated areas include specific locations where activities are carried out, such as catchment areas for abstraction points, and other areas identified by a risk assessment. The targets to be achieved for populations of 10,000 equivalent in these sensitive areas are as follows:
• 31 December 2033 for 10% of those populations
• 31 December 2036 for 30% of those populations
• 31 December 2039 for 60% of those populations, and
• 31 December 2045 for 100% of those populations
Extended Producer Responsibility Scheme
Quaternary treatment of wastewater will incur significant costs. They will include costs of ongoing monitoring of wastewater and the cost of upgrading WWTPs with new equipment. The EU considers an EPR Scheme to be the most appropriate means to recover these costs under the ‘polluter pays’ principle.
The EU has applied EPR Schemes for other product sectors, such as batteries. These Schemes can limit the impact on the taxpayer, while providing an incentive to producers to develop greener products.
The EPR Scheme will apply to producers who place on the Irish market certain medicinal products for human use[2] and certain cosmetics products[3] (Producers). “Producers” includes:
• Manufacturer
• Importer
• Distributors, and
• Distance sellers
“Placing on the market” means the first making available on the market of a Member State.
The EPR Schemes must ensure that producers cover:
• At least 80% of the full costs of the Member State complying with the quaternary treatment requirements, including the investment and operational costs
• The costs of gathering and verifying data on products placed on the market, and
• Other costs required to exercise their EPR.
Ireland will be obliged to provide an exemption from the EPR Scheme to certain producers. They include producers who can demonstrate, for the products they place on the EU market, that:
• The quantity of the substances contained in the products is below one tonne per year, and
• The substances contained in the products are rapidly biodegradable in wastewater or do not generate micropollutants in wastewater at the end of their life.
Ireland must ensure that an EPR Scheme operator is established and applicable Producers:
• Provide the operator with certain data concerning their products and the substances in the products they place on the market on an annual basis
• Contribute financially to the operator in order to cover the costs arising from their EPR. This is determined on the basis of the quantities and hazardousness in the urban wastewater of the substances contained in the products that are placed on the market, and
• Established on the territory of another Member State or in a third country appoint an authorised representative for the purposes of complying with the EPR requirements.
EPR Scheme operators will be required to publish certain information publicly online, including the financial contributions paid by producers. However, the Revised Directive does provide that the confidentiality of business information must be preserved in accordance with relevant EU and national law.
Impact on industry
As EU Directives do not have direct effect, Member States have a certain level of discretion in how to transpose them into national law. For example, the penalties for non-compliance will be set out in national law, taking into account the criteria in the Revised Directive.
Regarding the requirement that industry should pay for quaternary treatment of wastewater, the Recitals to the Revised Directive specify certain considerations. Member States should assess the possible impacts of the EPR Scheme on the accessibility, availability and affordability of products at national level. This applies in particular to medicines for human consumption. Member States should also consider possible impacts on the “level playing field”.
Article 10(5) of the Revised Directive provides that Member States must organise regular dialogue to ensure its EPR Scheme is implemented as optimally as possible from a cost-benefit perspective. The dialogue should include relevant stakeholders, including producers and distributors, amongst others. It should try to identify measures to:
• Reduce micropollutant pressure at source, and
• Determine the most appropriate technologies for quaternary treatment.
The EPR Scheme must apply to at least 80% of the full costs of the requirements. However, each producer’s contribution is determined on the basis of the quantities and hazardousness in the urban wastewater of the substances contained in the products that are placed on the market. Therefore, producers may want to consider assessing their current “contribution” and whether this can be reduced.
Proposed ban on PFAS
Separate to the Revised Directive, the European Chemicals Agency (ECHA) is considering a proposal to ban PFAS on the EU market. The ban has been proposed jointly by Germany, Denmark, the Netherlands, Sweden, and Norway.
The ECHA is currently considering submissions on the proposed ban. It is expected to make a recommendation to the European Commission in 2025 on whether a ban or limited restrictions or derogations should be introduced. An alternative option could, for example, involve conditions allowing the continued manufacture, placing on the market, or use of PFAS instead of a ban. This consideration is particularly relevant for uses and sectors where evidence suggests that a ban could lead to disproportionate socio-economic impacts. Member States will ultimately have to vote on any proposals.
Conclusion
Ireland must ensure the EPR Scheme for producers of medicinal products for human use and cosmetics products is in place by 31 December 2028. Ireland will have until 31 July 2027 to transpose the provisions of the Revised Directive into national legislation.
In the meantime, there should be opportunity for producers and distributors of these products to discuss the implementation of the EPR Scheme with Government. The European Commission may also publish guidance on how the Directive should be transposed by Member States. Producers should avail of any opportunities or guidance to try to ensure the costs they are required to pay do not have the effect of endangering the affordability, availability, or accessibility of these products on the EU market.
In addition, producers should assess their products in terms of their “hazardousness” and potential to give rise to the micropollutants covered by the Revised Directive. This may identify areas where such substances could be changed for alternatives that do not give rise to the applicable micropollutants.
For more information, please contact a member of our Planning & Environment team.
High Court Fails to Make Findings of Fact
Court of Appeal allows appeal in drug patent dispute
Gerard Kelly Partner, Head of Intellectual Property
+353 86 820 8066
geklly@mhc.ie
The case at issue concerns Bristol-Myers Squibb’s (BMS) appeal against a High Court ruling handed down in December 2023. The High Court had found that Irish patent number EP (IE) 1 427 4151, also known as the 415 patent, was invalid and should be revoked.
Teva challenged the 415 patent on the grounds of priority and plausibility. The challenge centred on whether the patent contained enough information to make it credible that the invention would provide the technical effect it claims. While the priority challenge was rejected, the High Court held that the patent was invalid because it failed the plausibility test. A similar invalidity decision was made relating to Supplementary Protection Certificate (SPC) No. 2011/032 for products containing the active ingredient apixaban. An example of a product containing apixaban is BMS’ Eliquis product. Apixaban is a form of factor Xa inhibitor and is listed in the 415 patent.
Duties of a trial judge to give reasons for their decision
At the beginning of the Court of Appeal judgment, Ms. Justice Costello stated that the High Court “either made no findings of fact or failed to explain such findings that it did make”. Ms. Justice Costello went on to detail the Common General Knowledge, or CGK, and witness statements of two medical chemists.
Adam Carr Associate, Intellectual Property
+353 86 206 1129
acarr@mhc.ie
The witness chemists were Dr. Young for BMS, and Dr. Edwards for Teva. It was held that the High Court trial judge failed to decide on the differences between the statements and to make findings of fact on their differences, “one of the most important tasks of the trial judge”. In addition, the Court of Appeal judgment stated that the trial judge: “failed to give any reasons, or any adequate reasons, why he rejected the evidence of one witness and preferred the evidence of another.”
Considering the relevant case law concerning the duties of trial judges, the Court of Appeal referred to the statement in Doyle v Banville2. The statement referenced that “the judgement must analyse the case made for the competing versions of those facts and come to a reasoned conclusion as to why one version of those facts is to be preferred.”
Ms. Justice Costello also referred to the 2024 cases of Butler v Regan3 and Action Alarms Limited v O’Rafferty4. Both cases reiterated the Doyle rationale that the appeal court should exercise self-restraint in overturning decisions so long as the trial judge makes clear statements in his or her findings. As a result, the Court of Appeal resolved that the inferences and conclusions to be drawn were that “if a judgment fails to make key findings of fact…it cannot stand and falls to be overturned on appeal.”
The Court of Appeal found that the trial judge “failed to a very large extent to make essential findings of fact” to the extent that the parties were unable to agree “whether certain passages of the judgment represented findings of the trial judge or not”. Accordingly, the Court of Appeal found that the case must be reheard in the High Court.
Test for plausibility
The Court of Appeal also considered the legal test for plausibility adopted by the High Court. In its decision, the trial judge applied the plausibility test in Norton (Waterford) Limited t/a Teva Pharmaceuticals Ireland v Boehringer Ingelheim Pharma GmbH & Co. KG5. However, the High Court judge had failed to pay heed to the test for plausibility in the decision of the Enlarged Board of Appeal in Case G2/21 involving Sumitomo.
In the current case, BMS had put forward Sumitomo as the appropriate test. The Boehringer test focuses on the technical contribution to solve the problem addressed by the patent and whether there is a real reason for supposing that the patent provides a sufficient technical contribution to make it plausible. Without having regard to the evidence, the trial judge decided that the patent did not provide a reason to suppose that apixaban was plausible as a factor Xa inhibitor, seemingly ignoring BMS’ arguments to the contrary.
The Court of Appeal ruled that the case should be reheard by the High Court before a different judge. It added that validity would be assessed by reference to the plausibility test in Sumitomo which is:
“the definitive view of the highest authority on the interpretation of the EPC”.
Judicial comity
The Court of Appeal also considered that the trial judge had made errors in its approach to the doctrine of comity. The doctrine of comity is the legal doctrine under which courts recognise and enforce each other’s legal decisions as a matter of courtesy but not necessarily as a matter of law. Teva had brought similar validity challenges in the UK, France, Norway, and Sweden. These were unsuccessful everywhere except the UK. The trial judge in this case appeared to rely heavily on the UK decision, often referencing it throughout the judgment. However, the judge failed to account for the clear differences between the technical evidence and arguments presented in this case and those considered in the UK. While the Court of Appeal refrained from commenting as to what regard the High Court should have to the various foreign judgments on the issue, it did note that further judgments had been handed down and would need to be considered by the High Court judge tasked with rehearing the case.
Comment
The judgment is significant for several reasons, particularly its detailed analysis of a judge’s duty to provide reasons for their decisions. It also underscores that an appellate court should not hesitate to grant an appeal if a judgment fails to address key findings of fact. The consequence is that “simply put, BMS does not know why it lost in the High Court and this Court cannot properly assess whether or not the High Court was correct to conclude that the 415 patent was invalid.” The judgment also clarifies that the relevant test for plausibility is the one established in Sumitomo. While the Boehringer test remains valid and relevant, Sumitomo should be the primary reference when evaluating plausibility.
For more information and expert legal advice on how best to protect your intellectual property rights, please contact a member of our award-winning Intellectual Property team.
Company Law Reforms Affecting the Life Sciences Sector
Nicholas Metcalfe Partner, Corporate Governance
+353 86 078 8295
nmetcalfe@mhc.ie
The Irish Companies Act 2014 was recently amended by the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 (the 2024 Act), which largely came into effect on 3 December 2024.
The amendments will affect companies in all sectors. However, they will be of interest to companies operating in the life sciences sector. We outline some of the changes which are likely to have the most practical effect.
Executing documents under seal in counterpart
Irish companies are required to execute certain documents under seal. This requires the company seal to be formally affixed to the document in question and one or two people to sign it (depending on the terms of the company’s constitution). Previously, the seal and signatures had to be in the same page. Now, in a widely welcomed move, a company is permitted to execute documents under its common seal in counterparts – that is, the seal can be affixed to one page, with the signatures on separate pages.
This provision allows for flexibility. It is particularly useful when a life sciences company’s seal and the persons authorised to countersign it are in different locations. It is also useful when the authorised signatories would like to, or have to, sign electronically.
Hybrid and virtual general meetings
A measure originally brought in as a temporary fix during the COVID-19 pandemic which now finds itself having permanent footing is the provision permitting companies to conduct general meetings virtually or in a hybrid format. This is a popular measure that also promotes flexibility by allowing individuals to attend meetings from various locations.
Changes to mergers
Previously under the Companies Act 2014, at least one of the companies participating in a domestic merger had to be one particular type of company. The 2024 Act now removes that obstacle and allows for a domestic merger to take place involving any kind of private company with a share capital.
A group of subsidiary companies, wholly owned by the same parent company, can now take part in a single merger by absorption. The change eliminates the need for multiple mergers, as was required previously.
These are both welcome amendments that will remove logistical burdens and enable life sciences companies to more easily streamline their merger processes. The domestic merger is a popular method for removing unwanted group companies. It allows for the transfer of assets and liabilities between companies by operation of law. The transferor companies are then dissolved without going into liquidation and without the need for a court application.
More grounds for involuntary strike-off
The grounds for involuntary strike-off by the Registrar of Companies will be extended to include the following:
• Failure to provide confirmation of the registered office
• Failure to appoint a company secretary, and
• Failure to comply with registration of beneficial ownership information requirements
There are a number of additional important provisions which will not come into effect later this year.
Audit exemption amendment
The audit exemption amendment will change the exemption regime for small and micro companies. It states that a company will lose its audit exemption where it fails to deliver its annual return for a second or subsequent time within a period of five consecutive years. At the moment, a small or micro company will lose its audit exemption if it fails to file any annual return on time.
Conclusion
The Act introduces significant amendments that will change how Irish life sciences companies are governed, regulated and managed. It will streamline procedures making them more flexible and adaptable enabling companies to fulfil their company law obligations in a more modernised and contemporary fashion.
Life sciences businesses should be aware of these changes to stay compliant with their company law obligations and also to enjoy the benefit of these more efficient procedures.
We have only outlined a couple of provisions in this article. Should you require more information, please contact a member of our Corporate Governance team.
Converting Offices to Life Sciences Spaces: Top considerations
Oliver FitzGerald Partner, Real Estate
+353 86 027 8838
ofitzgerald@mhc.ie
When considering whether to convert a preexisting office space into a life-sciences laboratory, it is important to keep in mind that not every office space will be a suitable candidate for such conversion projects. We consider some of the main requirements to be aware of when looking to undertake such a conversion.
1. Planning and Building Control
Conversion from office use to life sciences use is likely to need planning permission. This is because the planning permission for a property usually provides for a specific ‘use’ that a property can be put to. Using the property contrary to the permitted use is liable to enforcement action being taken by the local authority.
If the permitted use does not include the proposed life sciences use, then an application for permission for change of use should be made to the local authority. Before making an application to the local authority, it is important to check whether the policies and “zoning” in the County Development Plan or the Local Area Plan are favourable for life sciences use at the property.
In addition to the planning matters, the conversion works may need to comply with Building Regulations including fire safety. Generally speaking, most works carried out to a property require submission of building control documentation to the local authority.
Jay Sattin Partner, Planning & Environment
+353 86 078 8295
jsattin@mhc.ie
There may be some exemptions for certain types of works, such as some internal fitout works, but this would need to be determined before works commence.
2. Layout
Laboratories usually employ an open-concept design. The removal of internal walls in an office building may prove difficult, especially if they are load-bearing. There will also need to be enough space to facilitate the delivery of materials and space to store these deliveries. Enough space and proper storage for laboratory waste and hazardous materials will also be needed. Functioning freight elevators may be required which are significantly larger than regular office elevators.
3. Height
Laboratories may need increased floor-to-ceiling height when compared to traditional office spaces. This may be necessary to accommodate specialist and potentially large equipment, as well as bespoke Heating, Ventilation, and Air Conditioning (HVAC) systems that may be needed. Many older office spaces, in particular, may have low floor-toceiling heights which may frustrate the conversion process.
4. Structure
The load-bearing weight of the floors in many existing office spaces may not be sufficient to support certain types of heavy industrial lab equipment. This equipment may exceed the typical load capacity of an office floor. Life science laboratories are often specifically designed with the equipment in mind, as many types of equipment need to avoid vibrational frequencies to properly operate. This would have to be considered in any office conversion.
5. HVAC
Existing office spaces may not be able to accommodate the HVAC system required, depending on the nature of the life-science experiments being conducted. HVAC plants for lifescience purposes will likely require more ductwork which could prove difficult to incorporate in existing offices with limited space available. It may be possible to facilitate this though external ductwork, but this could involve planning permission considerations.
6. Utilities
Laboratories may require utilities and services with a greater capacity than offices. Updating the existing office to accommodate this increase in utilities and outgoings may be difficult, especially if the office space is old. Additionally, back-up generators may be needed for equipment.
Conclusion
Converting an office space into a life sciences laboratory presents significant legal and practical challenges that must be carefully considered from the outset. From planning permission and building control compliance to structural integrity and utility capacity, each aspect requires thorough due diligence and expert consultation. Failure to address these requirements properly could result in costly delays, enforcement action, or even an unviable project. Before committing to a conversion, developers and investors should seek professional advice to ensure compliance with all legal and regulatory obligations and to assess the feasibility of repurposing the space for life sciences use.
For further information, please contact a member of our Real Estate or Planning & Environment teams.
Ireland’s New Participation Exemption
The final piece of the jigsaw in Ireland’s holding company regime
Kevin Mangan Partner, Co-Head of Tax
+353 86 167 2150 kmangan@mhc.ie
Ireland’s attractive tax regime and its transparent and predictable tax system have been key drivers for some of the world’s leading public and private multinational groups establishing holding companies in Ireland. The introduction of a participation exemption for foreign dividends from 1 January 2025 will further improve Ireland’s competitiveness on the global stage. It is broadly anticipated that it will enhance Ireland’s reputation as an attractive place in which to invest and do business.
Application of the exemption
The participation exemption will exempt qualifying distributions1 made on or after 1 January 2025 from corporation tax in the hands of the recipient. Companies can opt into the exemption on an annual basis. This exemption will apply to all in-scope foreign distributions received by that company during the accounting period for which the election is made.
Existing regime
The existing tax credit system for foreign distributions will continue to apply for any accounting period for which a company does not opt into the exemption. It will also continue to apply for foreign distributions that do not qualify for the exemption.
Niamh Caffrey Partner, Co-Head of Tax
+353 86 032 4193 ncaffrey@mhc.ie
Under that existing regime distributions received are subject to corporation tax in Ireland. However, a credit is given for tax paid overseas with the effect that generally no further tax is payable in Ireland. The existing regime is complex in terms of tracing through foreign credits, so the new exemption method is expected to simplify the tax compliance obligations for holding companies or companies with established headquarters in Ireland.
Key conditions
Key conditions of the exemption are set out in the following table. Readers should be aware that there are additional aspects not detailed here that need to be considered.
Tax residence and status of the payer
• Resident in an EEA state, ie EU member states together with Iceland, Liechtenstein and Norway, or a country with which Ireland has a double tax treaty, referred to as a ‘Relevant Territory’, and must not be generally exempt from foreign tax
• Not resident in a jurisdiction that is included on the EU list of noncooperative jurisdictions, known as the EU Blacklist
• These tests must be met on the date the distribution is made and throughout the 5-year period prior to that date or, where shorter, the period from incorporation of the payer
Ownership of the payer by the Irish holding company
Qualifying distribution
• 5% ownership requirement, by reference to ordinary share capital, profits available for distribution and assets on a winding up
• An indirect shareholding via an intermediary company resident in a Relevant Territory may be taken into account
• The holding requirement must be satisfied for an uninterrupted period of at least 12 months that includes the date of the distribution
• Made in respect of share capital, which can include preference share capital
• Income in the hands of the recipient
• Must not be:
– Deductible for tax purposes in any other jurisdiction or be interest or interest equivalent or other income from a debt claim providing rights to participate in a company’s profits
– A distribution on a winding up, however, such a distribution may fall under Ireland’s participation exemption for capital gains
Source of distribution
• Made “out of profits” or “out of the assets” (for example out of a capital reserve) of the payer company
• Where the distribution is paid out of assets of the payer, additional tests must be met including that a sale of the shares of the payer company at that time would qualify for the existing Irish capital gains tax participation exemption
Anti-avoidance rules
The exemption will not apply to distributions from a company where certain transactions took place in the five years before the distribution. These include merging with a company, or acquiring a business from a company, that was not resident in a Relevant Territory.
In addition, a specific anti-avoidance provision disapplies the exemption where arrangements are put in place, one of the main purposes of which is obtaining a tax advantage and those arrangements are not considered genuine.
Other features of Ireland’s holding company offering
In addition to this new exemption, the following features of the Irish tax regime make Ireland an attractive location for a holding company, subject to satisfying the qualifying criteria:
• Exemption from capital gains on disposals of shareholdings of 5% or more in companies
• Exemptions from withholding tax on interest and dividends payable by Irish companies
• 12.5% rate of corporation tax for trading activities, with 25% rate for passive activities
• Expenses of managing a holding company are generally deductible for tax purposes in Ireland
• Interest deductibility on debt-financed share acquisitions
• Ireland has an extensive double tax treaty network currently with 74 countries which include all the major trading nations
• Ireland has implemented applicable EU tax directives and OECD policies on tax matters
• Ireland’s transfer pricing rules follow the OECD Guidelines
Conclusion
In our view, the introduction of this exemption is the final piece of the jigsaw in ensuring that Ireland’s holding company regime remains competitive and continues to attract global businesses.
While there are detailed qualifying conditions and anti-avoidance provisions which should be considered in advance of any distribution to an Irish holding company, it is not expected that these should affect most standard dividend payments from companies resident in the EEA or countries with which Ireland has a double tax agreement.
Existing Irish holding companies should review their corporate structure to ensure that distributions from group companies will qualify for the exemption and groups considering the establishment of a holding company in Ireland should factor the exemption into their considerations.
For more information and expert advice on all relevant taxation matters impacting your business, contact a member of our Tax team.
Employee Non-Solicitation Clauses: Competition Law Red Flag?
Tara Kelly Partner, Head of Competition, Antitrust & Foreign Investment
+353 86 145 5201
tarakelly@mhc.ie
The European Commission has communicated a clear intention to take a strict approach towards all forms of ‘no-poach’ agreements. It views these agreements as a form of market sharing, which is a serious infringement of the competition laws. The Commission considers that, insofar as the competition laws are concerned, there is no meaningful distinction between an agreement not to actively or passively hire employees and an agreement not to proactively solicit employees. Both are potential restrictions of competition by object. This means that agreements not to hire or solicit another company’s employees are considered to be inherently harmful to competition. As a result, it is not necessary for the European Commission to examine their effects to find an infringement of EU competition law.
The European Commission has not yet issued an infringement decision concerning a no-poach arrangement. Last year, the European Commission announced it had opened a formal investigation in the food delivery sector, prompted by concerns about possible no-poach agreements among other matters. The announcement followed dawn raids carried out at the premises of Delivery Hero and Glovo in 2022 and 2023. Additionally, in November 2024, the European Commission announced that it had carried out dawn raids in the data centre construction industry. The purpose was to investigate “possible collusion in the form of nopoach agreements”.
In Ireland, the Chair of the Competition and Consumer Protection Commission (CCPC) has confirmed that the CCPC would be keen to investigate wage-fixing or no-poach agreements if evidence of these arrangements emerged.
What does this mean for non-solicitation clauses in the context of a legitimate commercial agreement, such as a distribution agreement or a joint venture? No-poach agreements may qualify as “ancillary” to a legitimate arrangement, and therefore fall outside the competition laws. However, this arises only under strict conditions. For a no-poach agreement to qualify as an ancillary restraint, four cumulative conditions must be met:
1. There is a main non-restrictive transaction
2. The no-poach restriction is directly related to that transaction
3. The no-poach restriction is objectively necessary and
4. The no-poach restriction is proportionate to the main objective of the transaction, ie there are no less restrictive means to allow the transaction to occur.
The European Commission has set a high bar for satisfying these conditions.
For example, a non-solicitation clause will only be considered “objectively necessary” if similarly situated parties would refuse to participate in the transaction without the restriction. This is the case when the main objective of the transaction would be “impossible” to achieve without it.
Therefore, at a minimum, it is important to ensure that the clause is scoped narrowly, including by covering only those employees necessary to the relevant relationship. Additionally, the company should be satisfied that there is no alternative, less restrictive means of achieving the same result as the non-solicitation clause, eg by entering an NDA.
Given the seriousness with which competition authorities throughout Europe are approaching agreements impacting labour markets, in-house counsel should:
• Proactively review existing commercial arrangements containing non-solicitation clauses to ensure they do not raise any competition law concerns
• Conduct a thorough competition law analysis of any new non-solicitation agreement before it is entered into
• Ensure HR personnel receive tailored competition law training, and
• Obtain specialist competition law advice before anyone in the company communicates with competitors about wages or hiring decisions or strategies
Please get in touch with a member of our Competition, Antitrust & Foreign Investment team for more information.
Life Sciences
Ireland is a globally recognised centre of excellence for life sciences, pharma and medtech companies, ranging from global multinationals to an increasing number of vibrant indigenous companies.
Our Life Sciences team, drawn from specialist practice areas across the firm, offers commercial and practical advice to global players and emerging companies alike. Our key strength is our industry knowledge and expertise. Many of our lawyers have backgrounds in industry, science and medicine.
Life sciences companies require a special blend of legal advice and industry knowledge. We advise on a variety of issues from the development, protection and licensing of intellectual property to clinical and regulatory matters.
We also advise on a number of other areas affecting the life sciences sector. In particular, we have deep expertise on the intersection of technology and healthcare law and are one of the few advisors in Ireland with this expertise.
About us
We are a business law firm with 120 partners and offices in Dublin, London, New York and San Francisco.
Our legal services are grounded in deep expertise and informed by practical experience. We tailor our advice to our clients’ business and strategic objectives, giving them clear recommendations. This allows clients to make good, informed decisions and to anticipate and successfully navigate even the most complex matters.
Our working style is versatile and collaborative, creating a shared perspective with clients so that legal solutions are developed together. Our service is award-winning and innovative. This approach is how we make a valuable and practical contribution to each client’s objectives.
What others say about us
Our Life Sciences Team
“The firm is notably engaged, both intellectually and pragmatically, in the analysis and management of clients’ positions and interests.”
Chambers & Partners, 2024
Our Life Sciences Team
“They assess complex situations in a balanced manner with an intuitive ability to recognise and understand the cases. They get the job done efficiently but always in a warm and friendly way.”
