ITALY Law and Practice Contributed by: Alessandro Corno, Luca Magrini, Pasquale Mosella and Rocco Pugliese, Alma LED
Expert determinations can also be litigated in court, though in limited cases (ie, absence of the expert’s determination, manifest error or unfair determination). Litigation among sellers and buyers over warranties and indemnities provisions are replaced by discus - sions (although fairly rare) between buyer and insurer under warranty and indemnity (W&I) protection. Disputes on the application of provisions concerning the management team and its relationship with the target company (eg, underperformance provision and leavership provisions, both centred on the termination of the relationship with the management and the alter - ation of the terms of the management incentive instru - ments attributed to the terminating management). Litigation is brought before court or arbitration panel. Arbitration is the preferred venue for PE investors as it is confidential, thus possibly limiting the adverse effect on the concerned parties’ reputation. Arbitra - tion is also much quicker, and the background of arbi - trators is often such that they have expertise which allows for a deeper and more knowledgeable under - standing of the matter subject to dispute. Arbitration is, however, regarded as much more expensive com - pared to litigation in court. In Italy, it is common for PE investors to bid on public- to-private (P2P) deals. The Italian Consolidated Finan - cial Act and the regulations issued by CONSOB, the Italian financial markets regulator, govern P2P deals. In a P2P deal, the target company’s board plays an important role, being required to publish a detailed opinion – based on a fairness opinion from an inde - pendent adviser – on whether or not the tender offer provides a fair price for the shareholders and making consequential recommendations to shareholders. The board therefore has the duty to ensure that the offer is fair and clear, and that shareholders are sufficiently informed to make their decision, and it must also be mindful of its legal obligations to prevent any defen - sive measures that could undermine the offer, unless 7. Takeovers 7.1 Public-to-Private
a prior authorisation from the shareholders has been obtained. In Italy, “relationship agreements” or “transaction agreements” between the bidder and the target are not as common as they are in other jurisdictions. However, the bidder will typically engage in pre-offer discussions – without contractual effects – with the target’s board to secure a favourable opinion. 7.2 Material Shareholding Thresholds and Disclosure in Tender Offers Under Italian law a mandatory tender offer (MTO) must be launched if a person directly or indirectly: (i) buys more than 30% of the voting securities; (ii) holds between 30% and 50% but increases their stake by more than 5% within 12 months; or (iii) gains control of a listed company in some other way. The by-laws of SMEs may set a different percentage for the threshold under (i), ranging from 25% to 40%. In order to avoid circumvention of the obligation to launch an MTO, thresholds are deemed crossed not only by direct holdings, but also by holdings of dif - ferent persons acting together, holdings of managed and affiliated funds, portfolio companies and potential holdings (ie, derivatives). Recent discussions in Italy point towards raising these thresholds, but the 30% threshold is meant to remain in place. 7.3 Mandatory Offer Thresholds Under Italian law (Italian Consolidated Financial Act) – which is in line with EU directives – a mandatory tender offer (MTO) must be launched if a person (or persons acting together) directly or indirectly acquires an Italian company’s shares with voting rights traded on the Italian stock exchange in excess of the thresh - olds indicated at 7.2 Material Shareholding Thresh- olds and Disclosure in Tender Offers . When it comes to shareholding consolidation and attribution, which are very important to PE bidders, Italian law combines the holdings of people who act “in concert” (acting together) and/or own indirect hold - ings through affiliated entities or portfolio companies. This means that shares owned by funds, companies
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