On March 21st, 2022, the Italian Government adopted Law Decree No. 21/2022 introducing urgent measures to react to the economic and humanitarian effects of the Ukrainian crisis ("Emergency Measures Decree"), which also amends the Government’s so-called "golden powers" of intervention in foreign direct investments involving companies operating in sectors deemed of strategic importance for the national interest (the “Strategic Sectors”). The golden powers were introduced by Law Decree No. 21 of March 15th, 2012 and subsequently supplemented pursuant to EU REG 452/2019 and Law Decree 105/2019 and Law Decree 23/2020.

The latest in a series of extensions of the Government’s takeover screening powers, the Emergency Measures Decree, which entered into force on March 22nd, 2022 has as its principal aim the strengthening of protectionsregarding national security in the Strategic Sectors, with particular reference to transactions involving 5G broadband electronic communications services and cloud technology (“5G Technology Transactions”).

What are the changes?

The most significant changes enacted by the Emergency Measures Decree involve:

  • extension of notification obligations to certain specific acts, previously falling outside the scope of the golden powers, of Italian companies operating in defence and national security: the Italian Government can now exercise its veto power on resolutions, actions or transactions, adopted by the shareholders or the board of directors of an Italian company operating in this sector, which result in the change in ownership, control or availability of strategic assets, including the assignment of tangible and intangible assets by way of collateral;
  • introduction of a joint notification regime for acquisitions of Italian companies operating in the Strategic Sectors: the acquiring company and the target company may now jointly notify the acquisition of a participation interest – subject to the satisfaction of certain conditions – in an Italian company operating in any of the Strategic Sectors, so as to avoid multiple notifications by the acquiror and then by the target once the board of directors has been reconstituted following the change of control. The target company may also join the screening procedure after the notification of the acquiring entity;
  • “normalization” of the emergency notification regime introduced after the Covid-19 outbreak for acquisitions carried out by EU and non-EU entities: as of January 1st, 2023, the acquisition of participation interests in Italian companies operating in the communications, energy, transport or the so-called infrastructural sectors are subject to the following notification obligations:
    • for acquisitions carried out by EU entities: the acquisition of a controlling participation interest (as defined in Article 2359 of the Italian Civil Code and Legislative Decree No. 58/1998) in an Italian company operating in the communications, energy, transport, healthcare, agri-food or financial sectors (including banking and insurance) must be notified for screening by the Italian government where the purchaser is an EU entity, even if based in Italy;
    • for acquisitions carried out by non-EU entities: the acquisition of an interest in an Italian company operating in the communications, energy, transport and the infrastructural sectors must be notified to the Italian government for screening if it concerns at least 10% of the voting rights of the target company (taking into account any pre-existing interest held by the acquirer) and the total value of the investment is Euros 1 million or more. A non-EU entity must also notify for screening any acquisition in an Italian company operating in any of the above sectors which takes its interest over the thresholds of 15%, 20%, 25% and 50%.
  • pre-filing and other simplification measures: secondary legislation is expected to identify the procedures for pre-filing of transactions involving defence and national security as well as energy, transport, communication and the infrastructural sectors, so as to allow a preliminary assessment by the Italian government. Further measures will also be introduced to simplify the methods, terms and procedures for screening by the Italian government where the Coordination Group unanimously resolves not to exercise “golden powers”;
  • strengthening of protection for 5G Technology Transactions:
    • the Italian government can now exercise its “golden powers” on the completion of contracts/transactions for the purchase of goods or services relating to the design, construction, maintenance and operation of networks for 5G communication services, including further goods, relationships, activities and technologies relevant for cybersecurity, including those related to cloud technology – to be identified by secondary legislation – as well as the acquisition of technology-intensive components for their implementation or operation;
    • an annual plan containing a detailed description of the 5G Technology Transaction to be implemented (the “Plan”) must now be submitted for screening to the Italian government, even if the transaction involves EU-entities. The government can impose conditions or exercise its veto within 30 business days, to be extended up to 100 business days in case of complex transactions or where there is a need for further information;
    • an enhanced cooperation with the National Evaluation and Certification Centre (so-called “CVCN”) has been established to evaluate transactions or contracts notified and conditions imposed thereon by the Italian government. The CVCN may flag non-compliance of the notifying company with the imposed conditions to the Coordination Group, which may impose sanctions, or revoke or amend the authorisation to implement the Plan, or even forbid the exercise of activities functional to the design, construction, maintenance and operation of networks for 5G communication services;
    • the Plan submitted for screening to the Italian government must include complete information on 5G Technology Transactions for which a favourable ruling was issued. Screening procedures of 5G Technology Transactions which are ongoing upon entry into force of the Emergency Measures Decree will be deemed extinguished by the Coordination Group and will instead be evaluated together with the Plan, the notification of which shall take into account such transactions.

What's next?

The Emergency Measures Decree, although already in force, will lapse automatically unless converted into law by May 20th, 2022. Further action from the Italian Parliament is awaited as amendments and refinements to the existing text may be introduced during Parliamentary debate on such conversion.