Italy

• 15/10/2020
• Jurisdictions

Italy has an ex post FDI screening mechanism in place since 2012. The Department for Administrative Coordination (the DICA) within the Office of the Italian Prime Minister is the responsible authority. The Italian FDI screening mechanism consists of the special power of the Italian Government to review investments made by foreign persons in certain industries considered to be of strategic importance (Poteri Speciali del Governo–  golden power). The screening mechanism was last amended by the Law Decree of 8 April 2020 which temporarily extended the scope of the golden power until 31 December 2020.

Scope

Applies to foreign entities, which are defined as: (i) natural or legal persons not established in an EU or EEA Member State, (ii) legal persons established in an EU or EEA Member State, but controlled, directly or indirectly, by natural or legal persons established outside the EU or the EEA; (iii) natural or legal persons established in an EU or EEA Member State, if there is evidence of circumvention of the rules governing the golden power. The screening mechanism is triggered under different circumstances in specific sectors:

Defence and national security sector, if a foreign entity acquires (i) a voting share above 3% in a company listed on the stock exchange; (ii) a voting share above 3% in a non-listed company that carries out activities of strategic importance to the defence system and national security; or (iii) a voting share above 5%, 10%, 15%, 20%, 25% or 50% in any listed or non-listed company as a result of any subsequent transaction.

Energy, transportation, communication and high-tech sectors, if a foreign entity acquires control in a company holding assets identified as strategic.

5G technology sector, if a foreign entity enters into agreements for the acquisition of goods/services relating to the design, implementation, maintenance and operation of networks for broadband electronic communications services based on 5G technology; or acquires technology-intensive components necessary for such implementation, maintenance or operation with entities outside the EU.

Critical infrastructures, whether physical or virtual, are subject to the Law Decree of 8 April 2020 which is applicable until 31 December 2020 as part of the COVID-19 response (the COVID-Decree). If the value of investment by any non-EU entity in this sector exceeds EUR 1 million, it must be notified if the investor becomes entitled to at least 10% of the voting rights of the target company (and any subsequent acquisition exceeding 15%, 20%, 25% and 50% thresholds).

Review criteria

The golden power can be exercised to determine whether the transaction may harm or constitute a material threat to essential national interests also considering circumstances affecting public policy or security.

Application procedure

It is mandatory to notify an acquisition falling within the scope of the FDI mechanism or the COVID-Decree within 10 days from the date of the transaction, the adoption of the corporate board resolution approving the acquisition, or if the undertaking has acquired goods or services relating to 5G networks, the signing of the contract. Supporting documents must be submitted in Italian or the original language with an Italian translation.

Filing fees

The Italian legislation does not provide for specific fees.

Implementation and government practice

The Government may (i) clear the transaction without conditions; (ii) prohibit the acquisition (e.g. the Government objected to Altran Italia SpA’s purchase of shares representing the entire share capital of Next AST srl in 2017); or (iii) make the acquisition subject to conditions (e.g. the approval of the transfer of the production of components for the Italian armed forces from GE-Avio srl to General Electric Company's plants in the United States under the condition that the operation would not affect the production activities transferred in 2017).

Due process

A prohibition decision must describe the threats of serious harm to the essential interests in detail.

Time limits

In the defence, national security, energy, transportation, communication and high-tech sectors, the golden power can be exercised within 45 days of receiving the notification, extendable once for a maximum of 10 days. In the 5G technology sector, it can be exercised within 30 days of receiving the notification, extendable twice by up to 20 days each time.

Confidentiality

The screening mechanism exempts information, data and records contained in documents originating from public administrations or private entities from the right of access, except for what is necessary to safeguard or defend the applicant’s legal interests.

Sanctions

In the defence, national security, energy, transportation, communication and high-tech sectors, failure to observe conditions imposed exposes an investor to an administrative fine equal to double the value of the operation and not less than 1% of the turnover achieved in the last financial year. In the 5G technology sector, an investor failing to observe the notification obligations or the conditions imposed is subject to an administrative fine of up to 150% of the value of the operation and not less than 25% of the same value.

Legislative developments

The temporary provisions of the Law Decree of 8 April 2020 will apply until 31 December 2020. No legislative changes are currently planned.

 

The above information is a summary that does not constitute legal advice. For exhaustive information, advice, and assistance please get in touch with our lawyers.