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;

The companies have to notify to the Italian Government these acts, resolutions or transactions within 10 days with all details.

Not later than 15 days from the notification, the Italian Government have to communicate the veto.

Any resolutions and actions adopted in breach of these provisions are ineffective, and the Government may order the pre-existing conditions and status to be restored. Also, in this case, any non-compliance with the order to restore the original status is punishable with a fine calculated with the same criteria mentioned above.

Moreover, the Law-Decree 21/2012 provides a specific procedure for the purchase of a shareholding by non-EU residents, in a company that owns strategic assets, sufficient to cause this subject to have permanent establishment as a result of the acquisition of the control of the company it is acquiring.

In fact, this subject has to notify to the Italian Government this purchase within 10 days with all relevant information related to the operation and the purchaser.

If this purchase is likely to give rise to serious and actual risks to the public interests, the Italian Government, not later than 15 days from the notification, can either impose specific undertakings to ensure the safeguard of the interests at issue; in exceptional cases, when the aforementioned procedure is not sufficient, the Government can exercise the right to oppose the purchase.

The Italian Government can exercise this right based on objective and non-discriminatory criteria.

After the Law Decree No. 21/2012, the Prime Ministerial Decree 6 June 2014, n. 108 expressly identified the strategic assets and the Presidential Decree 19 February 2014, n. 35 sets out the procedural rules for the exercise of special powers such as the content and validity requirements of the notification, the parties responsible for the submission of the preventative notification, the investigation procedure and the authorities involved.

Endnotes

(1) See the Law Decree No. 21 of 15 March 2012, converted by Law No. 56 of 11 May 2012.

(2) See the Prime Ministerial Decree 6 June 2014, n. 108

(3)See the Presidential Decree 19 February 2014, n. 35