ITALY Law and Practice Contributed by: Alessandro Corno, Luca Magrini, Pasquale Mosella and Rocco Pugliese, Alma LED
government spending more on defence and important infrastructure.
trol, and the Presidency of the Council of Ministers, which is in charge of the “Golden Power” regime. AGCM is responsible for clearing deals with an over - all value exceeding certain turnover thresholds to prevent anti-competitive concentrations. This affects both corporate buyers and PE-backed investors. The Golden Power regime is particularly critical to PE because it gives the government the power block or set conditions on investments in strategic business - es. This regime is very broad and applies to investors backed by PE, especially those with ultimate benefi - cial owners who are not in the EU. Regulators showed a different approach in the way they view financial investors (often prompting inquiries in complex invest - ment structures) and special care is given to sovereign wealth funds, which due to the geopolitical interests surrounding them are perceived as deserving more attention. The Golden Power regime keeps evolving, and the government is taking a more proactive role. The list of strategic sectors has also grown. The EU Foreign Subsidies Regulation (FSR) is also very important for transactions in Italy as it applies to all companies operating in the EU. The FSR provides that PE backed buyers must notify the EU about any deals where the acquired company exceeds a certain turnover threshold in the EU and foreign subsidies have been endowed beyond a certain amount. In the last year, the implementation of new EU direc - tives and a growing focus on sustainability in the mar - ket have required PE funds to undergo more thorough ESG due diligence and demonstrate clear ESG strate - gies, with more emphasis on reporting and transpar - ency. If the PE fund’s target is an Italian listed entity with securities trading on the Italian stock exchange, CON - SOB (the Italian financial markets regulator) is also involved and supervises that the take-private trans - action complies with European rules on transparency and best pricing, as well as MAR (market abuse regu - lation).
2. Private Equity Developments 2.1 Impact of Legal Developments on Funds and Transactions There have not been a lot of major modifications to the law in Italy that directly affect PE in the past year, yet adjustments to existing laws have had significant impacts. The most important evolution has been the “Golden Power” regime and its application as it has grown and become more assertive over time. It was origi - nally meant to protect strategic assets in areas like defence and energy, but its scope has grown over time to include other important areas such as tel - ecommunications, healthcare and finance. When a PE investor or deal involves a company in a sensitive industry, they are now subject to heightened scrutiny. The regime now covers more types of transactions, such as buying minority stakes and making certain corporate transactions, beyond mere changes of con - trol. This has a significant impact on making deals. For PE investors, this means that deals involving Italian strategic assets are no longer just about price and business terms. They now have to go through a regu - latory approval process that could take a long time and be hard to predict, which could cause significant delays and uncertainty. The Italian government may impose conditions on the deal or, in the worst cases (although rare), block it in whole. As a result of this, Golden Power risk assessment is now an important component of legal due diligence, and deal documen - tation frequently includes specific golden power con - ditions precedent. 3. Regulatory Framework 3.1 Primary Regulators and Regulatory Issues The main – and more frequently involved – regulators on Italian PE transactions are the Italian Competition Authority (AGCM), which is in charge of merger con -
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