By Antonio Coletti, Stefano Sciolla, and Isabella Porchia

The Italian Council of Ministers has approved law decree no. 148 (the Decree), extending the disclosure requirements on stakebuilding in Italian listed companies and the Italian government’s so-called “golden powers”. The government may exercise these powers — veto or special conditions — in connection with extraordinary transactions involving companies conducting business in strategic sectors (such as defence and national security).

The first aspect of the Decree deals with stakebuilding. In addition to the ordinary disclosure requirements regarding significant holdings in Italian listed companies, investors building up stakes equal to or higher than 10%, 20%, or 25% must disclose their intentions for final ownership to the Italian Securities Commission and to the target listed company six months after reaching the relevant percentage.

Specifically, the disclosure must include:

  • The financing used for the acquisition
  • Whether the investor acts in concert with other investors or alone
  • Whether the investor intends to continue acquiring stakes
  • Whether, and if so, how, the investor intends to take control of the listed company or influence its management
  • The investor’s intentions for shareholders agreements to which the investor is party
  • If the investor intends to add or revoke members of the board of directors or the internal control board

The second aspect of the Decree extends the government’s golden powers rules and relevant sanctions to block takeovers by non-EU companies to high-technology sectors. The remit extends to sensitive or critical infrastructures — for example, storage and treatment of data, artificial intelligence, and aerospace technology — that may pose a serious threat to essential national interests or present a risk to public order and national security.

The Decree took effect immediately after the Italian Council of Ministers’ approval on October 16, 2017, and the Italian Parliament will convert the Decree into law within 60 days.

The new rules aim at strengthening defenses against hostile takeovers of strategic Italian companies and safeguarding national interests in line with similar rules already adopted by major economies.