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Review procedure

Notification of foreign investments falling within the scope of the government's special powers outlined in Section II must be made in advance to the government.

The general rules of the review procedure are set out in the Law, with implementing provisions spelled out in the Review Regulation (relating to energy, transport and communications), Government Regulation No. 35 of 19 February 2014 (relating to defence and national security) and the subsequent Prime Ministerial Decree dated 6 August 2014. As mentioned, with respect to high-tech assets, no implementing provisions have been adopted yet (although we expect that, once the relevant assets are identified in detail, the Review Regulation will apply).

i Process

The Law requires that the following be filed with the government:

  1. notification of any relevant resolutions adopted, or transactions carried out, by a company exercising any strategic security activity or holding any strategic or high-tech asset within 10 days and in any event prior to their implementation;
  2. notification of any purchase of interests in any company exercising any strategic security activity or holding any strategic asset within 10 days of the acquisition. Purchases of equity interests in a company active in the fields of defence or national security trigger the notification obligation if they exceed the thresholds of 3, 5, 10, 15, 20, 25 and 50 per cent; and
  3. notification of any agreement relating to 5G assets or services within 10 days of signing.

The notification of the resolutions or transactions must be made through ad hoc forms issued by the government and filed by means of certified email.

The review procedure is coordinated by the Department of Administrative Coordination (a specific government office), which is assisted by a coordination group composed of representatives of the ministries involved in the review procedure and, where necessary, members of other bodies (including private organisations) whose competence is required for a deeper understanding of the issues and interests.

Upon receipt of the notification, a standstill period of 45 days begins, during which the ministry in charge of the initial assessment carries out its review of the proposed investment, resolution or agreement and, taking into account the work of the coordination group, formulates a proposal to the Presidency of the Council of Ministers (and a draft of the related government decree). To this end, the Second 2019 Decree clarified that certain sector-specific public authorities must cooperate with the coordination group to facilitate its task, including by providing the necessary information (which they may not withhold on secrecy grounds).

The subsequent decree, whereby the government exercises its special powers, must specify the conditions or requirements imposed on the investor, the criteria and mechanics for monitoring compliance with the foregoing (including by identifying the specific administration) and the penalties applying in cases of infringements.

Until completion of the review procedure, voting rights attached to the acquired interest are suspended.

Moreover, during the review, no specific procedural standing or right of the parties involved in the transaction are expressly provided for by the Law (except for limiting the application of standard transparency rules to the proceedings). However, sound cooperation between the government and the notifying party is regarded as standard practice, possibly involving preliminary discussions prior to sending the formal notification, to allow the government to conduct its review properly and to make an informed decision by the statutory deadline.

In any event, should the government elect not to (or fail to) exercise its powers by the end of the standstill period, the proposed transaction may be legitimately carried out.

As previously mentioned, the government's decisions must be adopted by a prime ministerial decree; the decree may be appealed only to the Administrative Court of Rome. In the event of non-compliance with the government's decisions, the related transactions are null and void, and the perpetrators are subject to administrative fines equal to twice the value of the transaction.

ii Criteria

In an attempt to address the criticism expressed by the European Court of Justice in its 2009 judgment concerning the previous 'golden share' regime, the Law establishes certain specific objective criteria that the government must take into account as a condition to exercise its special powers.

In particular, in the context of the foregoing review procedure, the government must assess, inter alia:

  1. as regards companies exercising any strategic security activity, whether the economic, financial, technical and organisational characteristics of the prospective investor (including consideration of any financing conditions), as well as its business plan, are suitable to carry on the business regularly, safeguard its technological portfolios and honour existing contractual commitments;
  2. as regards companies holding any strategic or high-tech asset, whether the situation resulting from the transaction (including consideration of any financing conditions) is suitable to guarantee the security and continuity of procurement, as well as the maintenance, safety and operations of the strategic asset;
  3. as regards acquisition of controlling stakes in companies holding any strategic asset or high-tech asset, whether the transaction could jeopardise security or public policy (and, in such respect, the Second 2019 Decree clarified that the government may take into account whether the foreign investor is controlled by a public administration of a non-EU country, including its armed forces, also as a result of significant public funding; whether such investor was involved in activities affecting security or public order of a Member State of the EU; or whether there is a serious risk that such investor engages in illegal or criminal activities); and
  4. in all cases, the existence of any links between the prospective investor and third countries that do not respect democracy and the rule of law, or maintain relations with criminal or terrorist organisations.