Covid-19 Emergency – Enhanced Transparency Requirements Adopted By Consob
On April 9, CONSOB adopted Resolution no. 21326 and Resolution no. 21327 which, under the new powers conferred to CONSOB by Article 17 of Legislative Decree no. 23 of April 8, 2020 (the “Business Decree“), provide for a regime of enhanced transparency for (i) the obligation to disclose significant shareholdings in certain Italian listed companies and (ii) the “declaration of intentions” on the investment objectives in the event of the acquisition of shareholdings in listed companies over the 10% threshold.
Both measures are applicable for three months (unless early revocation) – i.e. April 11 until July 11 – to 104 companies listed in Italy (the list of the companies is attached to the Resolutions), identified according to the criterion of the shareholders base spread.
Listed companies controlled by right, (i.e. those in which there is a shareholder holding more than 50% of the capital) remain outside the scope of application.
Obligation to disclose significant shareholdings
Pursuant to Art. 120, par. 2-bis of the Financial Consolidated Law (“TUF”), as amended and supplemented by Art. 17 of the Business Decree, CONSOB has established the following additional thresholds for a period of three months (unless early revocation is decided), the passing of which triggers the communication obligations set forth in Article 120, par. 2 of the TUF:
- an additional 1% threshold for the companies that do not qualify as “SME having a widespread shareholders base” and are listed in Section A of the Schedule attached to Resolution 21326, and
- an additional 3% threshold for the companies qualifying as “SME having a widespread shareholders base” pursuant to Art. 1 w-quater.1 of the TUF, and listed in Section B of the Schedule attached to Resolution 21326.
The exemptions from the disclosure obligations of significant shareholdings provided for by Art. 119-bis of the Issuers Regulation remain valid and in force.
Accordingly, pursuant to Art. 114, par. 5 of the TUF, anyone who, at the date of entry into force of Resolution 21326 (April 11), holds a stake in the voting capital of the listed companies referred to in the Schedule that exceeds the thresholds provided for under i) and ii) above and is lower than the thresholds referred to in Art. 120 par. 2 of the TUF, is required to comply with the communication requirement provided for by Art. 120, par. 2, of the TUF, within 10 business days from Resolution 21326 entering into force. In the event such a communication has already been made pursuant to Resolution no. 21304 of March 17, 2020 it will not be necessary to reiterate it.
As of April 11, Resolution 21304 of March 17, 2020 is repealed. This resolution had introduced a similar obligation for 48 listed companies, identified according to the twofold criterion set by the version of Art. 120, par. 2–bis TUF in force before the amendments introduced by the “Business Decree” (i.e.: a) “the high market value” and b) the “shareholders base spread“).
It should be noted that with the entering into force of the “Business Decree” – which has amended Art. 120, par. 2-bis TUF introducing as the only criterion the “widespread shareholders base” – the scope of application of the new disclosure obligation is therefore expanded.
Obligation to communicate the investment objectives
Using the powers granted to it under Art. 120, par. 4-bis of the TUF (as amended by the “Business Decree”), CONSOB has temporarily enhanced the transparency requirement concerning the “declaration of intentions” provided by Art. 120, par. 4-bis of the TUF.
Resolution 21327 has introduced (i) for a period of three months starting from April 11 (subject to early revocation) and (ii) for the listed companies having a widespread shareholders base indicated in the Schedule attached to the Resolution, the additional threshold of reaching or passing 5% in which the obligation to disclose and communicate their investment objectives for the period relating to the following six months provided by Art. 120, par. 4-bis of the TUF is triggered. Further thresholds of 10%, 20% and 25% remain unchanged.
Resolution 21327 confirms that the exemptions to the disclosure obligations provided for by new Article 122-ter of the Issuers Regulation – introduced by CONSOB Resolution no. 21320 of April 7, 2020 – are applicable also to the temporary 5% threshold.
Resolution 21320 (not yet published on the Official Gazette) amended – among various changes – the Issuers Regulation concerning (i) the procedure to be followed for the communication of the “declaration of intentions” and (ii) the exemptions to the obligation to communicate the “declaration of intentions“.
The new Art. 122-ter of the Issuers Regulation establishes the following exemptions to the communication requirement provided for by Art. 120, par. 4-bis TUF:
- when (i) another shareholder alone holds the majority of voting rights exercisable in the ordinary shareholders’ meeting (Art. 49, par.1, let. a); (ii) the equity investment is acquired as a result of a transfer between companies in which the same person or persons hold, singly or jointly and directly or indirectly through a subsidiary company pursuant to Article 2359, par.1, n. 1, of the Italian Civil Code, the majority of voting rights exercisable in the ordinary shareholders’ meeting, or is acquired as a result of a transfer between a company and such persons (Art. 49, par.1, let. c); (iii) the threshold is exceeded as a result of exercise of the pre-emption, subscription or conversion rights originally attributed (Art. 49, par.1, let. d) and (iv) the obligation is the result of inheritance or gratuitous deeds between living individuals (Art. 49, par.1, let. h);
- when the purchase of the stock is also suitable for determining the takeover bid obligation pursuant to Art. 106, par. 1 or 1-bis TUF, and one of the exemptions provided for by Art. 49, par. 1 letters b) or g) occurs;
- in the cases indicated in Art. 119-bis, par. 3, letters a), b) and c-ter), 5 and 6 of the Issuers Regulation;
- without prejudice to the provisions of the last part of Art. 49, par. 1, let. d-bis) of the Issuers Regulation, if the reaching or passing the thresholds is determined by changes in the share capital and / or in the number of voting rights, based on of the information published by the issuer pursuant to Art. 85-bis of the Issuers Regulation;
- for management companies who acquire shareholdings, even in aggregate form, in listed issuers as part of the management activities referred to in Art. 116-terdecies, par. 1, letter e) of the Issuers Regulation, performed in compliance with the conditions defined in Directive 2009/ 65/EU, or for non-EU entities who perform an activity for which, if they had their registered office or central administration in an EU State, an authorization pursuant to Directive 2009/65/EU would be required, as well as for Italian AIFs not reserved for professional investors and for EU AIFs whose applicable national legislation provides for investment limits and conditions equivalent to those contemplated by Italian regulations with reference to AIFs not reserved for professional investors;
- if the purchase of the investment determines the obligation or is made in the context of a public purchase or exchange offer communicated to the market.
The new rule provides that the “declaration of intentions” shall be filed complying with the terms provided for by Art. 121 of the Issuers Regulation and using the model provided in Annex 4 to the Issuers Regulation in a searchable electronic format.
The existence of one of the above indicated causes for exemption – except for the cause under letter c) – shall be indicated in the model for the communication of major shareholdings provided in Annex 4 of the Issuers Regulation.
 Art. 49, par.1, let. b contemplates an exemption “when the relevant threshold is exceeded:
1) if there is a recapitalisation of the listed company or another measure to strengthen equity, and the company is in difficulty, proven by:
(i) admission to a bankruptcy proceeding envisaged in Italian Royal Decree no. 267 of 16 March 1942 or in other special laws;
(ii) approval of a debt restructuring agreement entered into with debtors pursuant to Article 182-bis of Italian Royal Decree no. 267 of 16 March 1942, disclosed to the market;
(iii) requests submitted by a prudential supervisory authority, in the event of serious losses, in order to prevent the use of extraordinary administration or administrative compulsory liquidation in accordance with the Consolidated Law, Italian Legislative Decree no. 385 of 1 September 1993, and Italian Legislative Decree no. 209 of 7 September 2005;
2) in the absence of other purchases made or agreed in the twelve months prior, exclusively by subscribing a share capital increase of the listed company, excluding the stock option, suitable to allow the company’s debt exposure to recover and to ensure the re-balancing of the financial position, implemented in execution of a recovery plan, even through debt rescheduling:
(i) that is disclosed to the market;
(ii) that certifies the existence of a crisis situation;
(iii) whose reasonability is certified by a professional in accordance with Article 67, subsection 3, paragraph d) of Italian Royal Decree no. 267 of 16 March 1942;
3) when there is a crisis situation which is not attributable to the situations described in points 1) and 2) of this paragraph, provided that:
(i) should the transaction be the competence of the shareholders’ meeting, also in accordance with article 2364, subsection 1, number 5 of the Italian Civil Code, the related resolution, without prejudice to the provisions of articles 2368, 2369 and 2373 of the Italian Civil Code, it is approved in the absence of the contrary vote of the majority of the shareholders attending the meeting, other than the buyer, the shareholder or shareholders holding, individually or jointly, the absolute or relative majority shareholding, because exceeding 10 percent;
(ii) when the transaction is not subject to a shareholders’ meeting resolution, it is approved by the favourable vote of the majority of shareholders other than the parties indicated in number 3 point i) above, who cast their vote by way of declaration contained in specific voting papers prepared and made available by the company. These voting papers shall be sent to the acquirer, via the depository of the securities, which shall attest to the ownership thereof, by the date and to the address indicated by the acquirer;”
 Art. 49, par.1 let. g provides for an exemption when “it is consequent to mergers or spin-offs approved by meeting resolution of the company whose securities would otherwise need to be subject to the takeover bid and without prejudice to the provisions of articles 2368, 2369 and 2373 of the Italian Civil Code, without the contrary vote of the majority of the shareholders in attendance, other than the shareholder acquiring the shareholding that exceeds the relevant threshold and the shareholder or shareholders which jointly or individually hold an absolute or relative majority shareholding that is over 10%.”
 “a) to those who acquire the shares exclusively for the purpose of the offsetting and settlement of the transactions covering said shares within the cycle after the transaction or to central counterparts for the shares covered by the transactions it guarantees and subjects to executive procedures, within the time limits required for the completion of said procedures”
 “b) to those who hold the shares within the sphere of the provision of the share custody service, provided that the latter can only exercise the voting rights pertaining to said shares in accordance with the instructions provided in writing or via electronic mediums by the shareholders due the voting right”
 “c-ter) The voting rights relative to the shares acquired for the purpose of stabilisation in compliance with article 5 of Regulation (EU) no. 2273/2003 and the relative technical rules for implementation providing the voting rights inherent to such shares are not exercised or otherwise used to intervene in the issuer’s management”
 “to shares acquired or sold by the European Central bank or the national central banks of the Member States when exercising their monetary authority functions, including the shares given or received by way of pledge, the shares subject to repurchase agreement or similar liquidity contracts, for the purposes of monetary policy or within the sphere of a payment system”
 “to short-term transactions and on condition that the voting rights pertaining to these shares are not exercised.”
“ d-bis) in companies whose articles of association allow for increased voting rights or which contemplated multiple-voting shares, the threshold is exceeded in the case of the reduction of the total number of votes that can be exercised on the matters indicated in Article 105 TUF, unless the subject concerned has bought, also in concert, a stake which, calculated in proportion to the total number of securities issued by the issuer which attribute the voting right on the said matters, exceeds the thresholds indicated in paragraphs 1, 1-bis, 1-ter and paragraph 3, letter b), of Article 106 TUF”