Preamble

The purpose here is to provide an overview of Italian applicable laws and regulations on issuers of financial instruments widely distributed among the public (“Issuers of Widely-Distributed Financial Instruments”) within the meaning of Article 116 of Legislative Decree No. 58/1998 (Consolidated Finance Act, “Testo Unico della Finanza” or “TUF”).

Issuers of financial instruments widely distributed among the public are defined in Article 2-bis of Consob Regulation No. 11971/1999 (“Issuers Regulation” or “IR”) as Italian issuers that

  1. have shareholders other than controlling shareholders accounting for more than 500, overall holding an at least 5% share in the company’s share capital; and
  2. are not eligible for drawing up simplified annual financial statements under Article 2435-bis, paragraph 1, of the Italian Civil Code ([1]).

In general terms, the discipline on Issuers of Widely-Distributed Financial Instruments is contained, respectively, in the Civil Code (Title V – Companies), the TUF and the IR (in addition to special provisions).

For the sake of clarity, the rules on Issuers of Widely-Distributed Financial Instruments are identified and gathered further below in a first paragraph that generally deals with corporate governance rules, a second paragraph that summarises the disclosure requirements to be met by Issuers of Widely-Distributed Financial Instruments and a third one that refers to further specific provisions of the TUF.

As for the issue of when the provisions of the Italian Civil Code or of the TUF should apply, it should be noted that the provisions of the Civil Code apply when a company becomes aware that the thresholds under Article 2-bis of the Issuers Regulation have been exceeded, while the disclosure requirements under the TUF apply from the start of the corporate financial year following the one during which the conditions set out in Article 2-bis of the Issuers Regulation were met.

Corporate governance

Concerning corporate governance, numerous provisions of the Italian Civil Code apply to Issuers of Widely-Distributed Financial Instruments, as the Code refers to “companies resorting to

the risk capital market”, which include both companies listed on regulated markets and Issuers of Widely-Distributed Financial Instruments.

As far as shareholders agreements are concerned, Articles 2341-bis and 2341-ter apply, which impose certain disclosure obligations for shareholders’ agreements entered into between shareholders of Issuers of Widely-Distributed Financial Instruments and a penalty regime applicable in case of non-compliance with the same ([2]).

Concerning purchases of treasury shares, Article 2357, paragraph 3, provides that, for purchases made by Issuers of Widely-Distributed Financial Instruments, the nominal value of shares shall not exceed 20% of the share capital. Again with regard to purchases of treasury shares, Article 2357-ter, paragraph 2, provides that, as to Issuers of Widely-Distributed Financial Instruments, the majorities required to convene meetings and pass resolutions shall be calculated in accordance with Article 2368, paragraph 3, with the consequence that treasury shares shall be computed in making the majorities to convene meetings but not to pass resolutions.

Concerning the terms and conditions for convening meetings, for Issuers of Widely-Distributed Financial Instruments, Article 2366 (which sets out the formalities for convening meetings) refers to special laws, with the consequence that their meetings are to be convened in accordance with Article 125-bis of the TUF ([3]).

According to Article 2369, paragraph 1, as far as Issuers of Widely-Distributed Financial Instruments are concerned, unless otherwise provided by the Articles of Association, shareholders’ meetings shall be convened in a single call and the majorities provided for therein shall apply: ordinary shareholders’ meetings shall be convened without any specific majority being required and resolutions shall be passed by an absolute majority of the capital present; extraordinary shareholders’ meetings shall be validly convened with the presence of at least one fifth of the share capital (unless larger majorities are required) and resolutions shall be passed with the favourable vote of at least two thirds of the share capital represented at the meeting. Where the Articles of Association derogate from the single-call rule under Article 2369, paragraph 1, the majorities required shall be those specified in Article 2368, whose paragraph 2 sets out specific rules for extraordinary shareholders’ meetings of Issuers of Widely-Distributed Financial Instruments: extraordinary shareholders’ meetings shall be validly convened with the presence of at least half of the share capital (unless a larger majority is required by the Articles of Association require) and pass resolutions with the favourable vote of at least two thirds of the share capital represented at the meeting.

According to Article 2377, paragraph 3, as far as Issuers of Widely-Distributed Financial Instruments are concerned, meeting’s resolutions may be challenged for annulment by shareholders owning a number of shares with voting rights related to the resolution representing, also jointly, one per thousand (0.1%) of the share capital, unless otherwise provided by the Articles of Association.

Under Article 2379-ter, paragraph 2, as far as Issuers of Widely-Distributed Financial Instruments are concerned, the invalidity of a resolution to increase the company’s capital cannot be pronounced after a statement has been filed with the Business Register Office pursuant to Article 2444, attesting that such increase has been even partially implemented, and the invalidity of the resolution to decrease the company’s capital under Article 2445 or to issue securities shall not be pronounced once the relevant resolution has been even partially implemented.

Article 2391-bis requires managers of Issuers of Widely-Distributed Financial Instruments to adopt internal procedures in connection with transactions with related parties, regulated by Consob Regulation No. 17221/2010.

According to Article 2393, paragraph 6, as far as Issuers of Widely-Distributed Financial Instruments are concerned, any waiver or settlement of actions for liability shall be approved by

express meeting’s resolution, provided there are no dissenting votes of a minority of shareholders representing at least one twentieth of the share capital (5%). For Issuers of Widely-Distributed Financial Instruments, the company’s action for liability brought by shareholders under Article 2393-bis may be exercised by shareholders representing one fortieth of the share capital (2.5%) or such other lower threshold as provided for by the Articles of Association.

According to Article 2409, paragraph 1, as far as Issuers of Widely-Distributed Financial Instruments are concerned, petitions for serious irregularities in management must be filed with the court by shareholders representing at least one twentieth of the share capital (2.5%). Furthermore, Article 2409, paragraph 7, again in relation to Issuers of Widely-Distributed Financial Instruments, provides that the measures in the article may also be taken upon request of the public prosecutor, with the costs of the investigation being charged to the company.

Disclosure obligations

According to Article 116 of the TUF, Issuers of Widely-Distributed Financial Instruments must comply with the disclosure requirements under Articles 114 (except for paragraph 7, concerning internal dealing) and 115 of the TUF.

Article 114 of the TUF regulates disclosure requirements concerning privileged information, whose discipline, as far as the Italian system is concerned, is first and foremost contained in Regulation (EU) No. 596/2014 (“Market Abuse Regulation” or “MAR”) and then in the TUF and the IR, insofar as not conflicting with the MAR.

More specifically, as expressly stated in Whereas Clause 8, the MAR applies to issuers whose shares are traded on multilateral trading facilities (e.g. AIM Italia), irrespective of their being classifiable as Issuers of Widely-Distributed Financial Instruments.

Therefore, as far as the obligations related to internal dealing are concerned, it should be underlined that the MAR applies to Issuers of Widely-Distributed Financial Instruments whose financial instruments are negotiated on a MTF (or which have applied for admission to trading), with consequent extension to them also of the duty to disclose management transactions ([4]).

According to Article 115 of the TUF, Consob exercises information powers vis-à--vis Issuers of Widely-Distributed Financial Instruments.

As concerns information requirements, Article 114-bis of the TUF applies (as required by paragraph 2 thereof), which provides that the allocation of financial instruments to members of

the management board, employees and collaborators shall be approved by the ordinary shareholders’ meeting, according to the terms and conditions set out therein ([5]).

Article 109 of the IR, in accordance with the MAR, provides that Issuers of Widely-Distributed Financial Instruments shall publish information on relevant events and circumstances as envisaged by Article 114, paragraph 1, of the TUF: a) complying with the provisions established by Articles 66, paragraphs 1, 2, a), b) and c), and 66-bis of the IR; b) sending the press release to at least two press agencies, or availing themselves of an SDIR, and through simultaneous publication in its own Internet site, when available.

Article 110 of the IR, concerning periodic information, provides that, at the same time as filing with Companies House in accordance with Article 2435 of the Italian Civil Code, Issuers of Widely-Distributed Financial Instruments shall make available to the public their approved financial statements, consolidated financial statements (if any) and reports stating the opinion of the auditing firm, by means of publication on the website or using an SDIR. Notice of having fulfilled the obligations shall be given in the ways set out in Article 109, paragraph 1, b) of the IR.

Furthermore, Article 111 of the IR provides that Issuers of Widely-Distributed Financial Instruments shall provide the public, without delay, by means of their website or using an SDIR, with information required for the holders of their financial instruments to exercise their rights and shall publish the notice convening the shareholders' meeting on their websites or using an SDIR.

Finally, Article 111-ter of the IR provides that Issuers of Widely-Distributed Financial Instruments shall forward Consob the above-mentioned information at the same time as its disclosure to the public by means of the Remote Collection System (Sistema di Teleraccolta), according to the terms specified by Consob in a notice.

Further specific provisions

The TUF provides that the provisions of Articles 155 et seq. of the TUF shall apply to Issuers of Widely-Distributed Financial Instruments (except for Articles 157 and 158), with a focus on the obligations of the person entrusted with auditing tasks, including vis-à-vis Consob ([6]).

Furthermore, the provisions of Articles 165-ter et seq. of the TUF shall apply to the relationships with foreign companies headquartered in countries whose systems do not guarantee transparency in the incorporation, asset-and-financial situation and management of companies (so-called “off-shore companies”).

Finally, Article 148-bis of the TUF imposes limits on the accumulation of offices by members of supervisory boards of Issuers of Widely-Distributed Financial Instruments.