ITALY: Public Consultation on new Major Shareholding Regulations pursuant to The Transparency Directive

Monday December 14 2015

A public consultation on the new Regulations on major shareholdings and amendments to The Issuers’ Regulations has been launched by the securities market regulator Consob in Italy and will end on 15 December 2015.

Italy is currently reviewing a draft legislative decree of transposition relating to Directive 2013/50/EU, (The Transparency Directive Amendment Directive), which introduced a number of significant changes modifying Directive 2004/109/EC. If enacted, further modification of The Consob Regulation will be required.

Changes made by Directive 2013/50/EU (Revised Transparency Directive)include:

• The extension of the scope of disclosure to holders of financial instruments with an economic effect similar to holding shares, with physical and cash settlement and provision for the obligation to aggregate voting rights related to holding shares, and
• Changes to the definition of “Home member State” and “Issuer”. :

The transparency of major shareholdings in Italy is currently governed by the CFL (Consolidated Law on Finance) and enforced by Consob under Art. 120, para. 4 of the CLF.

Currently, the amendments to the primary legislative provision, the Consolidated Law on Finance, as regards the definition of “issuer” and “home Member State,” are before Parliament.

The current consultation concerns changes to the Issuer Regulation which will be required to implement the provisions of the Consolidated Law on Finance and to effect the changes required following the TDAD and the Regulatory Technical Standards.

Please note, a number of the amendments necessary to align the regulations to the new delegated Regulation (EU) No. 761/2015 (the“RTS” regulation) were made with Resolution No. 19446 of 25 November and these are applicable from 26 November 2015.

DESCRIPTION OF PROPOSALS.

1. Recent changes resulting from Regulation on Regulatory Technical Standards (RTS) contained in Resolution No. 19446 applicable from 26 November, automatically apply and are not under consultation.

This outlines various technical standards which concern in particular:

1. The calculation of exemption thresholds (Article 2 and 3)
2. The method for calculating voting rights for financial instruments relating to baskets or indices of shares (Article 4)
3. The delta adjustment method for calculating voting rights in relation to cash settlement instruments (Article 5).
4. The scope of the “client serving” exemption (Article 6)

With regard to client-serving exemption, the RTS stated the exemption to notification obligations within the limits of 5% applies only to the extent attributable to the trading-book. It was therefore necessary to repeal the client-serving exemption provided for in the Regulation and make the trading-book exemption apply also to transactions carried out on behalf of customers.

2. Amendments aimed at implementing Directive 2013/50 / EU under consultation.

2.1 The significance of financial instruments economically equivalent and the delta.

Articles 12, para. 1 and 13 of The Transparency Directive requires disclosure relating to “economically equivalent securities” to be transposed.

Furthermore Article 13, para of the Transparency Directive lists the instruments requiring disclosure.

To apply the disclosure rules, set out by The Directive, it is proposed in Art 116 of the Issuers’ regulations, to include an open definition of “Financial Instruments” that references the rules defining the TUF (The Financial Markets Act, 1998), which are already in line with the list contained in Directive 2013/50/EU, and to further reference the list prepared by ESMA.

2.2. The reformulation of the basket

Under the Directive, disclosures are required under 3 separate “baskets”, which each require disclosure of shareholding and voting rights at a minimum threshold of 5% and subsequent incremental thresholds as provided in Art 9 of The Directive, being;

1. Actual holdings and voting rights (Art. 9 and 10 of The Directive),
2. Potential holdings (Art. 13), and,
3. The aggregate of (i) and (ii) above (Art. 13).

The legislative decree has amended the threshold for basket 1 to 3%.
Disclosures relating to instruments relevant to basket 2 retain the current threshold of 5%, in line with the Transparency Directive. Basket 2 will now include all financial instruments under TDAD and the ESMA indicative list,

Art 119, para. 2 of Resolution 19446 reduces the minimum threshold of the aggregate holdings or voting rights from 10% to 5% (basket 3 – total long position) and further aligns the thresholds to those specified in The Transparency Directive.

2.3 . Exemptions from the notification requirements of major shareholdings.

Regarding exemptions from notification requirements of major shareholdings and of changes necessary to effect the implementation of the Directive, it is proposed:

• To introduce non-recurring changes of substance to exemptions regarding market making and trading book (The amendments to indicate that it can apply to client-serving activities)
• To introduce an exemption for stabilisation operations
• Exemptions shall also apply to client serving transactions, in accordance with Article 6 of Commission Delegated Regulation (EU) 2015/761 of 17 December 2014.

2.4 Notification period

The amended TDAD requires a disclosure “no later than 4 trading days” after exceeding the threshold. Consequentially it is proposed to amend Art 121 of The Issuer’ Regulation, to reduce the notification period from 5 to 4 days and expressly state that calculation is to commence upon the day of the transaction.

The comments to the consultation document must be received by December 15, to:
C O N S O B., Regulatory Strategies Division, Via G. B. Martini , n . 3, 00198 ROMA
or online via the SIPE – Integrated System for the Outside

For a link to the consultation please click above