ITALY: Monti government limits Italy golden shares in strategic companies

Tuesday March 13 2012

It has been reported that the Italian government has scrapped some of its special Italy takeover defenses (known as “”golden shares””) in former state-owned companies. The move is an attempt to end a dispute with the European Commission over the Italy golden shares, with infringement proceedings beginning in 2009.

The changes, which were adopted at a Cabinet meeting on 9 March, will limit the use of golden shares to block takeovers in strategic industries such as defence, energy, telecommunications and transportation. Italy has golden shares in companies such as Telecom Italia SpA, oil producer Eni SpA and defence contractor Finmeccanica SpA. In the energy, transportation and communications industries, the new rules restrict the application of the government`s takeover veto to buyers outside of the European Union and only under specific circumstances, such as when they are unable to offer sufficient financial guarantees or the potential buyer may be linked to organised crime. For companies in the defence industry, the government veto can also apply to EU buyers, however this is only where there is an “”effective threat”” to national security.

Golden shares are increasingly becoming victim to EU infringement proceedings, with Germany`s golden share in car manufacturer Volkswagen being subject to an ECJ ruling calling on the government to remedy the “unjustified special right”. Germany has yet to adequately address the issue.

This information will be updated as further details become available.