As announced in our previous blog post, the broadest powers to the Italian government in relation to M&A deals became fully effective as of yesterday.
The extension of the Golden Power regime has been approved together with other emergency measures to face the current COVID19 emergency, including massive injections of liquidity into companies that risk bankruptcy as a consequence of the continuing lockdowns (keep checking our website for the upcoming client alerts).
The declared goal of the new legislation is to protect the national strategic sectors from predatory acquisitions, which may be favored by the current market values, affected by the ongoing emergency.
In light of the European Commission guidelines of March 26, 2020 (providing guidance to the Member States on foreign investments, ahead of the application of EU Regulation 2019/452) and in line with what is happening in other countries (e.g. Spain, France, Australia, Germany and the United States), the Law Decree of April 8, 2020, introduced:
1. The extension of the Golden Power regime to:
- supply of critical inputs (including energy or raw materials, as well as food security);
- access to sensitive information (including personal data) or the ability to control such information;
- the freedom and pluralism of the media;
- the financial and insurance sectors.
2. The obligation to notify relevant acquisitions also when the purchaser is a EU entity.
3. The specification of the thresholds triggering notification: for EU companies, a controlling participation (within the meaning of Section 2359 of the Italian Civil Code), while for extra EU companies, a participation of at least 10%.
4. The power of the Government to start on its own the Golden Power procedure, if the relevant entities do not comply with the notification obligations.
The extensions under numbers 1 to 3 above are temporary (the first one until a further decree is adopted and the second and third ones until December 31, 2020), while the one under number 4 has no deadline (so far).
No doubt that the above reform considerably increases State intervention in the economy. One could ask if – in short – the response to the virus would be the nationalization of the strategic sectors. Nevertheless, when asked, the Cabinet Undersecretary Riccardo Fraccaro stressed that “the intervention must be temporary and urged by an emergency. This is not a nationalization of the entire economy but a public intervention to protect specific areas”.