The Legislative Decree published today in the Official Gazette (DL) provides for measures granting special temporary powers with the objective of expanding the prerogatives of the Government and extending the application of “Golden Powers” to all sectors deemed of strategic importance indicated by the EU Regulation 2019/452 on the screening of foreign direct investments (FDI Regulation) also to investments made by subjects belonging to the European Union.
The DL provision intervenes on article 2 of Legislative Decree no. 21/2012, cd. “Golden Power Decree”, which governs the special powers of the Government relating to strategic assets in the energy, transport and communications sectors, as well as in the sectors indicated in Article 4, par. 1, of the FDI Regulation.
The legal framework according to the Golden Power Decree prior to the entering into force of the DL
The special powers granted to the Government under the Golden Power Decree consist in the power to:
- veto in the event of resolutions, acts or operations that have the effect of changing the ownership, control or availability of strategic assets or changing their destination;
- subordinate the effectiveness of the purchase to the assumption by the buyer of direct commitments, or
- object to the purchase by a non-EU entity of a controlling interest in a company that holds strategic assets;
The Golden Power Decree contemplates that the identification of strategic assets in the sectors referred to in Article 4, par. 1, of the FDI Regulation shall be made through the adoption of a specific decree (Strategic Assets DPCM): such decree has not yet been adopted. Article 4, par 1, of the FDI Regulation considers the following sectors strategic:
- critical infrastructure, whether physical or virtual, including energy, transport, water, health, communication, media, data processing or storage, aerospace, defence, electoral or financial infrastructure, and sensitive facilities, as well as land and real estate crucial for the use of such infrastructure;
- critical technologies and dual use items as defined in point 1 of Article 2 of Council Regulation (EC) No 428/2009, including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies as well as nanotechnologies and biotechnologies;
- supply of critical inputs, including energy or raw materials, as well as food security;
- access to sensitive information, including personal data, or the ability to control such information; or
- the freedom and pluralism of the media.
Pending the adoption of the Strategic Assets DPCM, the Golden Power Decree envisaged the application of special powers for the purchase of equity investments in companies with assets in the sectors referred to in Article 4, par. 1, letters a) and b), of the FDI Regulation, determining the acquisition of control and stable settlement.
The changes introduced by the DL to the existing legal framework
In this context, the changes introduced by the DL provide that:
- until the coming into force of the Strategic Assets DPCM provided for by article 2, par. 1-ter of the Golden Power Decree, the purchase of equity investments in companies that hold assets in all the sectors referred to in Article 4 (1) of the FDI Regulation, including in the financial, credit and insurance sectors, are now subject to the notification procedure provided for by Article 2, par. 5 of the Golden Power Decree. In addition, the notification concerns the purchases of all shareholdings, regardless of the relevance of the shareholding and even if made by an EU entity;
- until 31 December 2020 and in order to counter the emergency from Covid-19, resolutions, deeds or operations adopted by entities holding assets and relations in sectors referred to in Article 4 (1) of the FDI Regulation, including in the financial, credit and insurance sectors, involving changes in ownership, control, availability or change of destination of such assets are required to be notified;
- until December 31, 2020, acquisitions of investments involving assets in the energy, transport and communication sectors, as well as in the sectors referred to in the previous point a), are subject to notification pursuant to Article 2, par. 5 of the Golden Power Decree. Acquisition of participations in companies operating in the above sectors are subject to notification in the event that the acquisition:
- allows any foreign entity, including EU entities, to take control- as defined by article 2359 of ICC or by the Financial Consolidated Law (TUF) – of the company, or
- allows a foreign non-EU entity to acquire a share of the voting rights or capital of at least 10% (including in the calculation shares already directly and indirectly owned) and with the overall value of investment of at least 1 M Euro. Acquisitions which trigger passing of the 15%, 20%, 25% and 50% thresholds are also subject to notification.
The new provisions will remain in force until 31 December 2020 and are applicable to all relevant transactions for which the notification obligation is triggered during the term of validity, even if the notification occurred later or was omitted.
All acts and measures adopted in the exercise of the special powers, as well as the effects produced and the legal relationships arising on the basis thereof, remain valid even after 31 December 2020.
It should be stressed that noncompliance with the notification obligation under the Golden Power Decree – unless the fact constitutes a crime and without prejudice to the invalidity provided for by law – triggers the application of an administrative fine up to double the value of the transaction and in any case not less than 1 percent of the cumulative turnover of the companies involved in the last financial year for which the financial statements have been approved.
Finally, again in the logic of enhancing the controls on transactions that entail changes in the ownership structures of companies, Article 17 of the DL amends and supplement Article 120 of the TUF, regarding the disclosure obligations of significant shareholdings. In particular it provides for:
- the extension of the possibility granted to Consob to set lower thresholds than those of 3% and 5% for SMEs for a limited period, having cancelled the condition that these must be equity investments in companies “with high current market value”;
- the transparency standard provided by Article 120, par. 4-bis TUF is strengthened, adding the 5% threshold to the purchase of investments on occasions in which the buyer is required to declare the objectives he intends to pursue in the following six months.