ITALY Law and Practice Contributed by: Silvia Bordi, Emanuele Bosia, Federico Dettori and Rodrigo Boccioletti, Gianni & Origoni
7.2 Restrictions Foreign VC investment in Italian portfolio com - panies is generally permitted, but certain legal and regulatory restrictions may apply depend - ing on the sector and structure of the transac - tion. Italy does not impose general currency exchange controls on foreign investors; capital can be freely transferred in and out, consist - ent with EU principles on free movement of capital. However, banking regulations prohibit non-licensed entities from performing activities reserved for financial intermediaries, such as collecting third-party savings or offering certain financial services without proper authorisation. The most significant restriction arises from Italy’s FDI screening regime, known as the “Golden Power” regulation. This framework allows the Italian government to review and potentially block investments by foreign investors, includ - ing EU investors, in strategic sectors such as defence, energy, telecommunications, critical infrastructure, health, financial services and AI. Venture investments targeting start-ups operat - ing in these sectors may trigger mandatory noti - fications and governmental clearance. Failure to comply can result in fines or even the nullification of the transaction. Over the past 12 months, geopolitical tensions and increasing EU-wide scrutiny of foreign investments, particularly from non-EU coun - tries, have led Italy to expand the scope of its FDI rules. Enhanced enforcement and lower thresholds for review mean that even minority VC stakes in sensitive sectors may now face scrutiny. This trend reflects broader European concerns about protecting strategic industries from foreign influence. As a result, foreign VC investors must conduct thorough regulatory checks and factor potential Golden Power impli - cations into their transaction planning, especially in tech-heavy or regulated sectors.
For private companies, especially S.r.l., equity offerings are largely governed by private con - tractual agreements and shareholder resolu - tions. Any issuance of new quotas requires approval by the shareholders’ meeting, notarisa - tion and registration in the Companies Register. The transfer of quotas is also subject to restric - tions typically set out in the company’s by-laws or shareholder agreements, including rights of first refusal and lock-up clauses. In more sizeable transactions or where employ - ees are entitled to equity participation, pub - lic offering regulations may come into play. If the offering qualifies as a public solicitation of investment – typically when it is addressed to more than 150 non-professional investors – the company must comply with the prospectus requirements under TUF and EU Prospectus Regulation unless specific exemptions apply. These rules aim to protect retail investors and ensure transparency but usually exclude offers made to professional investors or employees under approved stock option plans. Where equity is offered broadly to employees, specific labour and tax rules apply, particularly regarding stock option schemes and work-for- equity plans in innovative start-ups. These struc - tures benefit from streamlined processes and tax incentives but still require compliance with Italian employment laws and proper documentation. Therefore, while private VC transactions often remain outside public offering regulations, the scale of the transaction and the number of ben - eficiaries may trigger additional legal obligations, making careful legal structuring essential.
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