Golden powers: a new set of special powers for the Italian Government

The Law Decree No. 21 of 15 March 2012, converted by
Law No. 56 of 11 May 2012, introduced a new set of special powers for the
Italian Government in relation to strategic sectors such as defence and national security, energy,
transport and communications.

The Law Decree No. 21 of 15 March 2012, converted by
Law No. 56 of 11 May 2012, introduced a new set of special powers for the
Italian Government in relation to strategic sectors such as defence and national security, energy,
transport and communications.

Contrary to the previous Italian legislation on the
“golden share”, which was applicable to companies operating in the defence,
energy, transport and communication sectors, directly or indirectly controlled
by the State, the new rules and special powers (a.k.a. “golden powers”) set
forth by the Law Decree no. 21/2012 apply to the companies, irrespective of
whether the State is their shareholder or not, which (i) carry out strategic activities deemed to be of strategic
importance in the defence and national security sectors, (ii) and in relation to companies holding assets deemed of
strategic importance in the fields of energy, transport and communications.

The Decree no. 21/2012 grants two distinct sets of
powers: one for the defence sector and one for the energy, transport and
communication sectors.

In both cases, the special powers attributed to the Italian Government and the conditions
under which such special powers may be exercised are now subject to stricter
and more objective limitations to comply with EU laws and to address the EU
Court of Justice’s proceedings against Italy. The conditions for the exercise
of the golden powers are, now, proportional, reasonable, clearly defined, non-discriminatory and objective.

Rules
applicable to the defence and national security sectors

In the defence and national security sectors, in
particular, when a company’s activities threaten serious damage to the
essential interests of defence and national security, the Italian Government may exercise the special powers in
the following cases:

a)       The
purchase, in any capacity, of shareholdings in a strategic business;

b)       The
adoption of shareholders’ resolutions
related to corporate transactions such as mergers, demergers, transformation
and dissolution of the company, transfer of business branches, amendment of
statutory provisions and changes to the business purpose of the company.

c)       The
acquisition of holdings by entities other than the Italian State or Italian
public bodies, should the acquiring party come to hold directly or indirectly a
level of interest in the capital with voting rights that is sufficient to
compromise the defence and national security;

In the first case, specific conditions may be imposed
in relation to the security of supply, the security of information,
technological transfers and the control of exports.

In the second case, a veto may be exercised by the
Italian Government.

In the third case, the right to oppose the purchase
may be exercised by the Italian Government.

To render possible the exercise of its veto power, the
company shall notify to the Italian Government a complete report about the resolution or the action to be
taken.

Within 15 days following the notification, either the
Italian Government exercises its veto or the transaction may be implemented.

Resolutions and actions adopted in breach of these
provisions are ineffective, a fine may be imposed and the Italian Government
may order the original conditions and status to be restored.

Any non-compliance with the order to restore the
original status quo is punishable
with a maximum fine of twice the value of the transaction, and in any case not
lower than the 1% of the revenues generated by the companies involved during
the most recent fiscal year for which
financial statements have been approved.

Rules
applicable to strategic assets in the communications, energy, transportation
sectors

The Law Decree No. 21/2012 defers to further ministerial decrees the
identification of assets, networks, plants and relationships of strategic
importance. With respect to them any resolution, act or transaction placed into
effect by a holding company, concerning changes in ownership, control or the
availability of the strategic assets, is to be reported to the Government in
advance. The Government may exercise its veto power in the event that:

(i)       Any resolution, actions or operations that may give
rise to serious and actual risks for the public interest in connection with the
operation of the energy transmission grids, energy plants and the consistency of
energy procurements;