ITALY Law and Practice Contributed by: Paolo Balboni, Luca Bolognini, Giulio Monga and Carmine Antonio Perri, ICT Legal Consulting
of the consideration with a bank designated by the issuer. The squeeze-out right operates in parallel with the sell-out mechanism under Article 108 TUF, which allows minority shareholders to request that the bid- der purchase their shares once it has exceeded 90% of the voting capital. In that case, the bidder is obliged to buy the remaining shares unless it restores a suf- ficient free float to ensure the regular trading of the shares within 90 days (Article 108 (2) TUF). Once the 95% threshold is reached, the sell-out right becomes unconditional. 6.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer Italian law does not impose a UK-style “certain funds” provision. However, under Article 37-bis of Consob Regulation No 11971/1999, a bidder launching a cash tender offer must provide Consob with a bank guaran- tee or equivalent assurance covering the full amount of the consideration. The offer document must also include a statement confirming that the necessary financial resources are available, specifying the sourc- es of the finance (own funds, credit lines, or guaran- tees). Consob will not authorise the publication of an offer unless the bidder has already secured the funds or a binding guarantee. In general, financing conditions are not permitted, as an offer cannot be made subject to the bidder obtain- ing financing. The guarantee or financial commitment must therefore be in place before filing the offer docu- mentation. 6.10 Types of Deal Protection Measures Under Article 104 TUF (the passivity rule), once a takeover bid has been announced, the target’s board of directors cannot take any action that may frustrate the offer or hinder competing bids, unless such action is authorised by the shareholders’ meeting. Before the launch of an offer, the bidder and the tar- get may enter into limited co-operation or exclusiv- ity agreements, such as short-term no-shop claus- es or matching rights, typically aimed at facilitating due diligence or preparing the offer documentation. However, these must be reasonable in duration and
scope. Break-up fees or termination fees are rarely used in Italian public takeovers and are permissible only if agreed before the offer is announced, limited in amount, and not capable of discouraging compet- ing offers. 6.11 Additional Governance Rights If a bidder does not reach 100% ownership following a takeover offer, it may still exercise significant control through ordinary corporate governance mechanisms. Italian law does not provide for “domination and profit transfer agreements” like those available in Germany. In those cases, governance is set by by-laws and shareholder agreements, which must be filed/dis- closed under Article 122 TUF. The bidder may also assume formal direction and co- ordination ( direzione e coordinamento ) of the target under Articles 2497ff of the Italian Civil Code, which must be publicly disclosed and entails liability towards minority shareholders and creditors for any abusive conduct. In addition, where other significant share- holders remain, shareholders’ agreements ( patti para- sociali ) may be entered into under Article 2341-bis of the Italian Civil Code to regulate board composition, reserved matters or voting arrangements. 6.12 Irrevocable Commitments It is relatively common in Italian public takeovers for the bidder to obtain irrevocable undertakings or ten- der commitments from key shareholders of the tar- get, particularly where there is a reference or control- ling shareholder. Such undertakings usually consist of a commitment to tender shares in the offer once it is launched, or to support corporate resolutions required for post-offer integration (such as mergers or delistings). To the extent that these agreements qualify as share- holders’ agreements, they must be disclosed to Con- sob pursuant to Article 122 TUF and Consob Regula- tion No 11971/1999. 6.13 Securities Regulator’s or Stock Exchange Process Under Article 102 (4) TUF, the offer document must be approved by Consob before publication.
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