ITALY: Guidance on exemptions from Italy mandatory bid rules

Monday September 22 2014

The Italian securities regulator Consob has provided guidance on the application of Italy takeover rules (contained in Articles 106 and 109 of Italian Legislative Decree No. 58/98 – Consolidated Law on Finance) to the operation to purchase a non-controlling equity investment in the share capital of a listed company on the part of a financial investor.

According to a query submitted to Consob for interpretation, the discussed operation is part of the listed company`s strategy to seek investors interested in taking part in strengthening it, at the capital, organisational and managerial levels.

This is also with a view to signing a shareholders` agreement aimed at regulating the reciprocal rights and obligations of the parties. The agreement would confirm the central role of the current de facto controlling shareholder for the purposes of defining guidelines for the strategy and operation of the industrial activity, and for managing the group`s growth process, without altering the issuer`s current control structures.

In particular, the current controlling shareholder would reduce its interest slightly and, although in the presence of a shareholders` agreement, would retain its position of dominant influence over the issuer with a stake of more than 30%. The investor would be given powers of supervision and monitoring on management of the issuer, without ever enabling interference in the management. The change in the issuer`s shareholding structures consequent to the operation would thus not determine variations in the control structures.

Therefore, in line with Consob’s orientations on the subject of applicability of the takeover-bid rules to operations for entry into a listed issuer`s shareholding structure of a non-controlling shareholder with signing at the same time of a shareholders` agreement (or acceptance of an already existing agreement), the aforementioned Articles 106 and 109 of the CLF do not apply to the operation.

Art. 106, Section 1, of the CLF states that, following purchases, anyone who comes to hold an equity interest of more than 30% has the obligation to promote a takeover bid aimed at all shareholders on all shares admitted to trading in a regulated market.

In addition, under the terms of Art. 109 of the CLF, in the presence of purchases for a consideration at the same time as a shareholders` agreement is signed, the parties to the same are obliged, irrespective of the stake acquired and of that held by each, to promote a takeover bid, if they come to hold a total equity interest of more than the significant thresholds, again under the terms of Art. 106 (30%) and 108, Section 1 (90%) of the CLF.

Click on the above link for Consob’s interpretation.