The Italian M&A market during 2022 has shown a certain amount of vitality despite facing pressures from exogenous sources of risk. M&A activity during 2021 had witnessed a record number of transactions in both value and number of deals, and this trend was confirmed during the first semester of 2022, when the M&A market, despite a slight decrease compared to the same period of the previous year, remained at higher levels than in the pre-pandemic period.

In this trend, a key role is played by M&A activity in the technology sector, which is still benefiting from the pandemic and from the growing interest that this has triggered about digital services (for example in the quick-commerce sector as well as in the “buy now pay later sector”). Indeed, out of 370 overall M&A transactions carried out in Italy in the first half of 2022, 15.5% were in the technology area. In particular, there has been continued high M&A activity in venture capital transactions as well as exits of Italian tech companies.

In any case, the impact of the conflict in Ukraine and the resulting inflationary pressures have generated a climate of global uncertainty, which has slowed the recovery from the recession caused by the pandemic. These factors could generate longer M&A process timelines in the near future, which is why large deals are more complex at the moment.

Usually, Italian founders who decide to incorporate a start-up choose to establish a newco in Italy. The process of incorporating a start-up in Italy is straightforward, albeit not cost free. Usually, a start-up is incorporated as a private limited liability company (società a responsabilità limitata), a company type that requires an initial capital requirement of EUR1. The incorporation of a new limited liability company requires the execution of a notarial deed before an Italian public notary, which generally takes around one week.

Typically, founders are advised to incorporate their start-up as a private limited liability company, since this type of entity requires a low initial corporate capital. In addition to that, a private limited liability company is also recommended because it can be easily managed and it is flexible, giving to entrepreneurs the opportunity to structure the company according to their necessities and to make it attractive to investors.

Starting from 2012, the Italian government provided a special regulation for private limited liability companies that are “innovative start-ups”, meaning those companies that provide products or services with high technological values. Companies that meet the objective and subjective requirements can access the status of an innovative start-up and enjoy tax, economic and management benefits.

Early-stage financing activity is the core of the Italian start-up system, with more than half of the total investments in 2021 made at a pre-seed/seed phase. This early financing activity, which provides resources to start-ups in the initial phase of their lives, is usually provided in Italy by accelerators and incubators, or by domestic and foreign venture capital funds. Another typical source of early-stage financing is government-backed investment funds. It is also possible that private investors, such as business angels, may be a funding source, although this scenario is less common in practice.

Usually, the documentation of an early-stage investment consists of an investment agreement together with a shareholders’ agreement and a revised version of the start-up’s by-laws; since the investment is made at an early stage when the company is not yet fully organised, all these documents tend to be investor friendly.

Venture capital funds in Italy are both private and public investors. On the private side, venture capital investments are made by independent business angels, angels’ networks, venture incubators, club deals, traditional Italian venture capital funds (who remain the most common player) and, in a few cases, large Italian companies. On the other side another important source of venture capital financing in Italy is the governmental venture capital, with the Italian government in 2021 having allocated EUR2.5 billion to support innovative start-ups and SMEs, thereby certifying the favour of the Italian government in supporting Italian start-ups via state-controlled funds such as CDP Venture Capital.

It is also important to note that, alongside Italian investment sources, a prominent role in financing start-ups is played by foreign venture capital firms which, during 2021, invested 35% of the total investments made into Italian hi-tech start-ups.

Although in Italy there are no official standards for venture capital documentation – unlike the British Private Equity & Venture Capital Association (BVCA) model in the UK or the National Venture Capital Association (NVCA) model in the USA – with time, a well-established practice has developed, meaning that today most venture capital documents have a similar structure. Usually, the venture capital documentation consists of a term sheet that summarises the results of the negotiation phase, followed by an investment agreement, a shareholders’ agreement and new company by-laws, which together comprise all the transaction terms. In particular, investment agreements in Italian venture capital deals, while different in each case, have very similar features and structure, including voting rights for investors and rights to designate members of the board of directors, pre-emptive rights, tag along and drag along clauses and economic rights for investors, such as those relating to dividends, liquidation preference and anti-dilution protections.

As Italian start-ups continue to develop and grow, they may choose to change their corporate form, transforming from a private liability company to a joint stock company. However, this process is not very common in practice. Italian law gives to private liability companies a flexible structure, especially if they are classified as innovative start-ups or as innovative SMEs, and therefore it is not necessary for Italian start-ups to change their corporate form as they progress in their development. It may happen that Italian start-ups choose to transform themselves into joint stock companies when, after a very high stage of venture capital financing, they become very well-structured companies, with perhaps the intention of listing themselves.

The IPO is not a very likely liquidity event in the Italian market. To provide an idea of the Italian market, there are currently around 10,164 start-up companies, of which only nine are listed on the Euronext Growth Milan (the Italian stock market dedicated to dynamic and competitive SMEs) in 2022.

There is a general reluctance of Italian companies to list on a regulated market. This is compounded by the fact that Italian start-ups are generally small; very few Italian start-ups report earnings between EUR2.5 million and EUR5 million. Therefore, it is more likely that the founders would seek a sale rather than an IPO.

If a company decides to do a listing, it may pursue a listing on a home country exchange or a foreign exchange, or both, depending on the size of the company to be listed, its financial planning and its plans for international expansion. Medium and small companies would typically prefer to list on the Italian stock exchange.

The impact of a listing in a foreign jurisdiction on a potential sale should be evaluated on a case-by-case scenario, depending on the jurisdiction of the foreign listing. However, in general terms, the Italian regulations on listed companies are quite comprehensive and strict. For example, Section 111 of the D.Lgs 58/98 - Testo Unico della Finanza (the “Financial Act”) contemplates the so-called “squeeze-out” mechanism, which applies whenever, following the launch of a takeover of all the outstanding voting shares of the target, the bidder comes to hold a participation at least equal to 95% of the voting shares of the target. In such a case, the bidder has the right to purchase the residual voting shares of the target within a period of three months after the end of the acceptance period, provided that the bidder has declared its intention to exercise its (potential) squeeze-out right in the offer document.

Therefore, it seems unlikely that a dual listing could significantly impact a future M&A transaction, as it is likely that the other jurisdiction involved provides for rules similar to the Italian set of rules.

A sale of a company in the Italian market is typically achieved after a bilateral negotiation with a chosen buyer. Indeed, even if the sale process could be run as an auction, in practice the sale of a privately held company that has venture capital investors in the cap table is usually done after a private negotiation conducted with a single buyer. Auction processes are seen in Italy, albeit not frequently in the technology M&A sector, but rather for major deals and when sellers are private equity funds.

The current trend in Italy for the sale of a privately held tech company with venture capital investors in its cap table is the sale of 100% of the company’s shares. It could happen that the transaction does not affect the entire company, but a majority of the shares, but in this case usually shareholders who remain in the company, retaining a minority participation, are company founders rather than venture capital investors. 

Even when the transaction relates to a controlling interest, venture capital investors usually have the option to exit from the company. Indeed, when they invest in a company, they typically have a co-sale right, which gives them the power to leave the company if the founders sell their majority participation.

In the Italian M&A market, the most common form of consideration for companies’ transactions is the sale of the entire company for cash. It can also happen that the consideration is a combination of cash and stocks, with the sellers that receive a portion of the price in buyers’ shares. However, in this latter case, the stock portion of the consideration usually constitutes a smaller portion compared to cash and the option to re-invest in buyers’ shares is usually given to specific key people such as founders, rather than to venture capital investors or other funds.

In the context of a transaction, all target shareholders are usually required to grant representations and warranties regarding capacity to enter into the transaction, share ownership and absence of any lien on shares. All shareholders, both founders and investors, usually give these representations and warranties and indemnify the buyer in the event of their violation. However, apart from these basic representations and warranties, all the other warranties (ie, those concerning tax, environmental, labour issues, compliance and business) are typically given only by the target or by the founders, while the venture capital investors, as well as all the other financial investors, do not give anything but fundamental warranties.

It is important to note that in practice, transaction documentation provides caps on the liability of founders and other investors, regarding both amount and time of indemnification requests.

Representation and warranty insurance is customary in Italy, but it is usually adopted only in larger transactions.

Spin-offs are not commonly seen in the Italian tech market. An exception to this can be found by looking at spin-offs that are created by Italian universities, start-up incubators or research institutions.

In these cases, spin-offs are new companies created from a technology project which originally starts within the institution and which, as it grows with time, necessitates a business separation.

In any case, albeit not very common, a spin-off can also be generated by an existing company, which wishes to separate valuable assets from the core business in order to reduce operational risks, achieve management flexibility and exploit tax benefits.

The spin-offs shall take the form of a demerger (scissione). The demerger shall be construed in accordance with the provisions of the Italian Civil Code or shall reflect similar hallmarks.

No demerger difference shall be paid in cash above 10%. The transaction shall be supported by sound business reasons (ie, it shall not be carried out only for tax reasons).

In principle, spin-offs can be immediately followed by a business combination; this is more likely to happen in the form of an acquisition, rather than a merger. There is no specific requirement for carrying out an acquisition of a spun-off company.

In principle, it is not necessary to obtain a ruling from a tax authority prior to completing a spin-off; however, since (i) specific anti-avoidance rules – which limit the recognition of tax assets (eg, tax losses carry forward, interest expenses (not deducted in a given fiscal year) carry forward); and (ii) general anti-avoidance rules apply to demergers, rulings to the tax authorities in connection with those extraordinary transactions are not rare. Moreover, ruling may also be requested with regard to the interpretation of tax laws. The timing is up to 120 days (plus an additional 60 days in case an additional request for documents or clarification is made by the competent tax office).

In the past, stakebuilding before announcement of a takeover offer was common practice in the Italian market. However, the Italian Supreme Court of Cassation (court of last instance) has recently convicted a bidder for breach of the market abuse rules for acquiring shares prior to announcing an offer. The basis for the Supreme Court’s decision was that the bidder’s knowledge of its own intention to make a takeover offer was deemed to be “inside information”. Such a decision of the Italian Supreme Court has been deemed as too strict and harsh by the majority of the Italian scholars.

The mandatory offer on all of the target’s outstanding shares is triggered whenever an entity/person, as a consequence of a purchase or the increase of the voting rights due to the loyalty shares, comes to hold a participation in a target company (i) exceeding 30% of the target voting share capital; (ii) exceeding 25% of the target voting share capital, provided that no other shareholder holds a higher participation (noting that the 25% threshold does not apply to “small medium enterprises”); or (iii) for any shareholder holding a participation higher than 30% but equal to or lower than 45% of the voting rights, exceeding 5% of the target voting share capital on a yearly basis.

The transaction structure provides for the launch of a voluntary or mandatory tender offer by a company, usually through a special purpose vehicle. The tender offer is launched by the offeror by submitting a notice pursuant to Section 102 of the Financial Act to the Italian financial market authority (“Consob”) and the market.

A merger is in theory possible; however, in a case of the merger of a non-listed company into a listed company, a specific exemption to the launch of a mandatory tender offer is applicable if the relevant resolution is taken through the whitewash mechanism (ie, if the majority of the minority shareholders attending the meeting vote in favour of the transaction). These kinds of transactions are very common. Conversely, it is highly unlikely that the acquisition is structured as a merger by incorporation of a listed company in an unlisted company (which would determine a death and de-listing of the former) unless the purchaser already controls the majority of the votes in the extraordinary shareholders’ meeting of the target company (which would be called to approve the merger). In this case, the withdrawal right shall be granted to shareholders who did not concur with the approval of the relevant resolution.

Public company takeovers are usually structured as cash transactions (only in certain cases the consideration consists of shares), while mergers, according to Italian law, are structured as stock-for-stock transactions, with an exchange ratio to be approved by the shareholders’ meetings of each of the companies taking part in the merger. Under Italian law, in case of mergers, it is possible to provide for a cash adjustment that shall not be, in any case, higher than 10% of the assigned shares’ nominal value.

With respect to takeovers, the price per share to be offered in the context of a mandatory takeover must be equal to the highest price paid by the bidder and/or by the persons acting in concert with the same for any direct or indirect acquisition of the shares of the target during the 12 months preceding the publication of the first announcement of the takeover offer. If no purchase of shares of the same class was made in the said period, the mandatory takeover shall be launched at a price not lower than the weighted market average price over the previous 12 months.

Mandatory offers cannot be subject to any conditions, while voluntary offers can be subject to conditions, provided that the conditions are not merely subjective, pursuant to Section 40 of the Consob Regulation No 11971 of May 14, 1999 (the “Consob Regulation”). Typical conditions of voluntary offers include the achievement of a certain minimum acceptance threshold, material adverse change, defensive measures adopted by the board of the target company, or the clearance by the competent antitrust authorities. The Italian regulators thoroughly check the conditions, in order to ascertain that these are objective.

Transaction agreements are entered into in connection with takeovers only when there is a controlling or significant shareholder. In these cases, the shareholders would typically enter into the agreement to either sell and transfer their stake to the bidder prior to the launch of the takeover or to undertake to accept the takeover and tender their stake in the takeover procedure. In such context, especially in the sale and transfer prior to the takeover scenario, it is common for the sellers to give representations and warranties on the target company.

Finally, it is quite customary in the Italian practice to enter into agreements governing mergers or other business combinations.

It is typical for the bidder in a voluntary offer to provide, as condition of the effectiveness of the offer itself, a minimum acceptance threshold of at least 66.67% of the share capital with voting rights of the target. Typically, the bidder reserves the right to partially waive this condition, provided that the shareholding that the bidder will hold upon completion of the takeover is at least equal to 50% of the share capital with voting rights plus one share of the target. This is because the threshold of 66.67% would ensure control over the extraordinary shareholders’ meeting, while 50% of the share capital plus one share would ensure control over the ordinary shareholders’ meeting of the target company. In any case, the percentage of the condition depends on the future programmes of the bidder as well as the participation in the target already held by the same bidder.

The Italian rules provide for the following squeeze-out mechanism: if, following a totalitarian tender offer, the bidder comes to hold a participation at least equal to 95% of the target’s share capital, then it will have the right to purchase the outstanding shares of the target within three months, from the end of the offer period.

According to Italian law, any bidder can make a takeover offer only provided that the same bidder is able to pay the consideration in cash (or in kind, in case of exchange offers) to any of the shareholders accepting the takeover bid. The bidder in a takeover must, by no later than one day prior to the publication of the offer document, submit to the Consob the documentation proving the setting up of funds and guarantees of the full compliance with the payment commitments under the offer. Takeovers cannot be conditional on the bidder obtaining financing.

The takeover of listed companies is a procedure thoroughly regulated under Italian law and a bidder cannot abandon the offer. The same applies to mergers, which are governed and regulated by the Italian Civil Code. With respect to other forms of acquisitions, parties can negotiate the insertion of a breakup fee, typically between 1% and 3% of the value of a transaction.

As mentioned under 6.7 Minimum Acceptance Conditions, the bidder does not need to obtain 100% of the voting shares to exercise an influence on the target. With 50% of the share capital with voting rights plus one share, the bidder would be in control of the ordinary shareholders’ meeting (where, inter alia, the decisions concerning appointment/revocation of the members of the board of directors and approval of the yearly financial statements are taken) while with 66.67% of the share capital the bidder would also control the extraordinary shareholders’ meeting (and therefore, it would be in control of decisions such as mergers or winding-up).

It is quite common to negotiate and obtain, from principal shareholders of the target company, commitments to tender their shares in the offer. This, typically, would be considered as a shareholders’ agreement, which, like any other agreements, is effective only between its parties and which would require disclosure to the Consob and the market. This type of agreement does not provide for “out” clauses. However, the Financial Act provides a special case of termination of these agreements (by allowing one of the parties to exercise a withdrawal from the shareholders’ agreements themselves) which applies in case there is a competing offer over the same shares from a third party.

Any offer needs to be approved by Consob; however, specific rules apply to targets operating in regulated sectors, such as banking and insurance, which also require the prior authorisation of the relevant authorities (eg, the Bank of Italy). In such case, Consob approves the offer document only after obtaining the relevant authorisation of the banking and/or insurance authorities.

If the acquisition requires clearance from antitrust or FDI or any other regulatory authority, the offer would be conditional upon the obtaining of the required clearances. The various antitrust and FDI filings can be made as soon as the notice pursuant to Section 102 of the Financial Act is released (ie, it is not necessary to wait until the offer document is approved by Consob), which is the official starting moment of the offer procedure.

Setting up a company in Italy is relatively quick and straightforward. The registration process for companies operating in the technology sector is no different from that of companies active in other industries.

Regulations on e-commerce, platform-to-business (P2B) relationships, data protection and cybersecurity are uniform across the EU. Yet, depending on the business, companies may be subject to ad hoc regulatory frameworks under Italian law.

For instance, Italy has recently enacted a body of law applicable to start-ups in the tech industry. This includes specific provisions concerning administrative simplification (Decrees of the Ministry of Economic Affairs of 28 October 2016 and of 17 February 2016), tax benefits (Legislative Decree No 179 of 2012) and bankruptcy (Legislative Decree No 179 of 2012). Companies that meet the requirements provided under the Legislative Decree No 179/2012 are granted the status of innovative start-ups and are registered in a dedicated section of the Italian Companies’ Register. Benefits include tax incentives (tax credit up to 40%) and fast-track access to government funding.

Consob is Italy’s primary securities market regulator.

Italy has a mandatory FDI regime, the so-called “Golden Power” regime, established with Law-Decree No 21/2012, amended and integrated multiple times, and further detailed and complemented by several Decrees of the President of the Council of Ministers (DPCM), among which are DPCM Nos 179/2020, 180/2020 and 133/2022.

This legislation affords the Presidency of the Council of Ministers the power to block a transaction in exceptional cases; ie, when it is not possible to impose conditions or to devise other kinds of mitigating measures.

The Golden Power regime consists of a mandatory filing to the Presidency of the Council of Ministers, which opens a review period of up to 45 working days (that can possibly be suspended in certain cases). A faster pre-notification procedure is also available under DPCM No 133/2022 (30 days) for legal certainty purposes in case of doubts as regards the applicability of the Golden Power regime.

The scope of the Golden Power regime is now very broad and catches a significant number of transactions (496 in 2021) in the relevant sectors, which include: defence and national security (including 5G), dual-use goods, critical infrastructure and technology in energy, transport, water, health, communications, media, data processing and/or storage, aerospace, electoral systems, finance, supply of critical inputs, food security and steelmaking. In the relevant sectors, the filing is due in several cases, including the acquisition of control of companies, mergers, acquisition of shares (as low as 3% in the defence sector), assets purchases, certain types of company resolutions, transfer of a company’s offices abroad, and even greenfield investments. While the general rule exempts intra-EU transactions from the filing obligation, in some sectors even purely national transactions (ie, between companies whose ultimate beneficial owners are Italian) are included.

There are no “safe harbour” thresholds in terms of turnover, asset size, sector, purchase price or enterprise value. It is, thus, always necessary to proceed to case-by-case analysis.

In case of lack of notification, the sanctions are significant, and include criminal sanctions, the unwinding of the transaction and fines, which are set at a minimum of 1% of the global turnover of the companies involved in the transaction.

For more details on the national security review, please see answer to section 7.3 Restrictions on Foreign Investments on the Golden Power regime.

EU export control legislation applies to Italy.

Italian merger control rules are provided under Law No 287 of 10 October 1990. These apply to mergers between two or more undertakings, acquisitions of control over whole or parts of other undertakings, or setting up of joint ventures.

Mandatory pre-closing filing obligations before the Italian Competition Authority (AGCM) arise if the following two cumulative thresholds are exceeded:

• the Italian turnover of all the undertakings involved is higher than EUR517 million; and
• the Italian turnover of each of at least two undertakings involved is higher than EUR31 million.

The applicable thresholds are updated each year (latest update occurred on 21 March 2022).

The AGCM assesses whether the transaction causes a significant impediment to effective competition. Law No 118 of 27 August 2022 (“Annual Competition Law”), clarified that such impediment may arise when control is acquired over small companies active in the field of new technologies and having “innovative strategies”.

Special regimes exist for companies active in the telecommunications sector.

The Annual Competition Law also empowered the AGCM to review transactions that fall below the thresholds above. The AGCM shall be able to request the parties to notify a transaction within six months from closing if:

• only one of the two cumulative turnover thresholds mentioned before is exceeded; or
• the total worldwide turnover achieved by all the companies concerned is more than EUR5 billion; or
• each of them, insofar as the transaction raises material risks for competition in the national market, or in a substantial part of it.

The actual qualification of the acquisition is relevant to determine the Italian labour law regulations applicable case by case.

If a share sale occurs, the employees’ employment relationships with the seller are not affected by the transaction between the seller and the purchaser. In this case, no statutory information needs to be provided to unions, unless expressly provided for by the relevant National Collective Bargaining Agreement and/or company collective agreements.

However, if an asset transfer occurs, the employment relationships, pursuant to Article 2112 of the Italian Civil Code, are transferred by operation of law to the transferee, without the employees’ consent and maintaining all their rights deriving from the employment contracts in force at the time of the transfer. Transferor and transferee are jointly liable for all the transferred employees’ credits accrued and existing as at the date of the transfer. Moreover, according to Article 47 of Law No 428 of 29 December 1990, if the transferor employs more than 15 employees and/or if expressly provided for by the relevant National Collective Bargaining Agreement, both transferor and transferee are required to follow a special consultation procedure with unions. Unions have no veto rights over the completed acquisition and thus neither the unions, nor the employees will have the right to block the transfer of the going concern.

In line with EU law, there are no currency control regulations in Italy. However, when the cash or bearer securities value being transferred is in the aggregate equal to or greater than EUR3,000, it is prohibited to transfer cash and bearer securities in euros or foreign currency, made for any reason between different parties, whether natural or legal persons.

M&A transactions in Italy, especially those in the technology sector, are often drafted with an extensive set of representations and warranties, with the related indemnification obligations. For this reason, disputes that may arise regarding a transaction are usually settled out of court. In addition, the contractual documentation regarding the transaction often includes an arbitration clause, which means that any controversy is resolved by an arbitration subject to confidentiality. For these reasons, there are not many relevant decisions regarding tech M&A.

On the other hand, in the last few years, there have been important legal developments that have significantly affected M&A activity in Italy. In particular, during 2022, an enhancement of the so-called Golden Power provisions has taken place as a response to the Ukraine crisis.

The Golden Power is the power given to the Italian government to limit or stop foreign investments in Italian companies and M&A operations concerning Italian strategic assets. In the event of such transactions, the parties have an obligation to make a notification to the Italian government, which will subsequently decide whether to exercise its power and how.

During 2022, the scope of the discipline was expanded to respond to geopolitical risks and the Golden Power discipline currently applies to a very wide range of subjects, particularly those concerning technology sectors, thereby potentially affecting deals (for further information please see 7.3 Restrictions on Foreign Investments).

Unless there is an order that the document is subject to specific secrecy classifications, under the Italian law there are no limits regarding the information that can be provided to bidders. The target board decides the level of detail that it is willing to provide, as it will be guided by what it deems to be in the best interest of the company and its business.

In the due diligence phase, it will be important to take appropriate precautions. Particularly, the signing of non-disclosure agreements is incredibly important as the parties undertake not to disclose any of the confidential information learned during the due diligence as well as to bind their respective consultants to confidentiality.

The impact of data protection law on due diligence is an increasingly important aspect of M&A transactions. The GDPR makes it clear that organisations must be accountable for the personal data they process.

Consultants assigned to conduct due diligence will have access to personal data of the target’s employees, consultants, clients and suppliers.

Disclosing, storing and accessing personal data are all acts of “processing”, which means that a legal basis as mentioned in Article 6 of the GDPR is required for such processing activities. Indeed, under the GDPR, any processing of personal data must be lawful, fair and carried out in a transparent manner. Data subjects whose data is involved in the due diligence process may have given explicit consent for their personal data to be processed as part of an M&A transaction.

Finally, it is important to underline that the due diligence report and executive summary should not include any indication of personal data.

According to Italian legislative and regulatory frameworks, the bidder shall make a bid public where (i) the target is a listed company and (ii) as a result of an acquisition, the bidder comes to hold a significant stake in the target; ie, (a) more than 30% of the share capital or (b) the different threshold – between 25% and 40% – set forth in the by-laws where the company is qualified as an SME. In addition, the Italian Consolidated Financial Act and the Consob Issuers’ Regulation provide for other cases of mandatory tender offer. However, the bidder may also launch a public tender offer voluntarily.

The bidder must disclose the decision to launch a voluntary tender offer (or the fulfilment of the obligation to launch a mandatory tender offer) without delay by means of a notice to the market, according to Article 102 of the Italian Consolidated Financial Act. Within 20 days from the release of such notice, the bidder shall file with Consob a draft offer document, to be prepared in accordance with Regulation EU 2017/1129 (“Prospectus Regulation”) and Delegated Regulation EU 2019/980 (“Delegated Prospectus Regulation”). It is worth noting that in specific cases an offer document is not required, but an exemption document is required instead (see 10.2 Prospectus Requirements).

Within 15 days from the filing date, Consob must approve the offer document or request additional information. Once the offer document is approved, it has to be made public immediately by the bidder. The offer document is published by both Consob and the bidder on their respective websites.

The acceptance period – which begins five market days after Consob’s approval – may vary from 15 to 40 market days, it being understood that Consob has the faculty to extend it to a maximum of 55 market days. Without prejudice to the chance for other bidders to launch a competing offer, at the end of the acceptance period the final results of the offer are made public, and the price is paid to the sellers.

Pursuant to Article 1, paragraph 4, letter e) of the Prospectus Regulation, the bidder is not required to draft an offer document for a public tender exchange offer, provided that an exemption document is published. Article 1, paragraph 6a of the Prospectus Regulation specifies that such exemption only applies to equity securities and provided that:

• the equity securities offered are fungible with existing securities already admitted to trading on a regulated market prior to the takeover and its related transaction, and the takeover is not considered to be a reverse acquisition transaction; or
• Consob has approved the exemption document.

It is worth noting that the exemption document – that must be approved by Consob where the securities offered in exchange are not listed – needs to be drafted in accordance with Delegated Regulation 2021/528. The major provisions to be reported in the exemption document are the following:

• sufficient information in order to enable the investors to understand the prospectus of the issuer, the rights attaching to the equity securities and the transaction and its impact on the issuer;
• the minimum information set forth in Annexes I and II of the Delegated Regulation 2021/528; and
• where the issuer has a complex financial history, all information referred to in Annex I or, where applicable, Annex II to this regulation about the entity other than the issuer as if that entity were the issuer of the equity securities, to the extent that investors need that information to make an informed investment decision.

However, according to Article 3 of the Delegated Regulation 2021/528, the exemption document may refer to the information set out in a different document previously or simultaneously published electronically with reference to the offer.

The bidder is required to disclose in the offer document the audited historical financial information of the issuer covering the latest three financial years (or such shorter period as the issuer has been in operation) and the audit report in respect of each year. Where such information is not available, the bidder sets out a specific note in the offer document. The bidder also needs to disclose its latest financial information.

The financial information must be prepared according to International Financial Reporting Standards. If EU Regulation is not applicable, the financial information must be prepared in accordance with a member state’s national accounting standards for issuers from the EEA, or a third country’s national accounting standards equivalent to Regulation (EC) No 1606/2002 for third country issuers.

The offer document (or exemption document, if any) approved by Consob needs to be published without delay. In the offer document shall be included the information concerning any target’s shares transactions carried out by the bidder before launching the public offer.

The duties of the directors of an SpA are regulated by the Italian Civil Code, which sets forth a number of responsibilities, including acting within the scope of the corporate purpose, gathering the necessary information and data, calling the shareholders’ meetings and executing the resolutions of the meetings, as well as keeping accounts, maintaining the corporate books and preparing the annual financial statements.

Moreover, in the daily operation as well as in any business combination, a director owes a duty to act in the interests of all its shareholders but at the same time a director can be jointly responsible with individual shareholders or third parties, if the individual shareholder and/or third party has suffered a damage that derives “directly” from the negligent or fraudulent action of the director.

In addition to these general duties, the duties of the director in the case of a business combination carried out by a merger are:

• to draw up draft terms of merger, which are subsequently filed for registration with the commercial register;
• to draw up a report explaining and justifying, from a legal and economic point of view, the draft terms of merger and the share or share exchange ratio; and
• to execute the filing for registration, within 30 days, with the Companies’ Register where the participating companies have their registered offices and at the same time or subsequently, where the registered office of the resulting company is located.

It is also important to point out that directors of Italian companies have the duty to avoid carrying out transactions which would cause the company to hold its own shares as well as shares of the controlling companies in excess of the limits provided for by the Italian Civil Code. Moreover, in addition to the specific duties resulting from provision of law, the specific by-laws of the company may provide for further duties of the directors.

In Italy is not common for boards of directors to establish special or ad hoc committees for the carrying out of transactions.

However, in a case where one of the companies taking part in the transaction is listed on the stock exchange, it would be necessary that the transaction is cleared by the “Related Parties Committee”, if such transaction is carried out with a related party of the listed company, in order to avoid any conflict of interests. Related parties are defined pursuant to principle IAS24 of the International Accounting Standards.

With respect to listed companies, the general principle, set forth under Section 104 of the Financial Act, is that the boards of directors of target companies should abstain from carrying out actions or transactions which might counteract the achievement of the goals of the takeover, save for those specific actions authorised by shareholders’ meetings. However, the by-laws of the companies might provide exceptions to such principle.

Moreover, pursuant to Section 103 of the Financial Act, the board of directors of the target company are required to disclose to the market a notice, in accordance with the forms and manner provided for in paragraph 103 of the Financial Act and paragraph 39 of the Consob Regulations, whereby the board will express its opinion on the fairness of the consideration offered by the bidder.

Prior to the approval of certain corporate transactions, it is common practice in Italy for the board of directors, especially of listed companies, to obtain a fairness opinion from either investment banks or accountants/auditors or auditing firms. In the context of a takeover bid over a listed company, as mentioned above, the board of directors of the target company is required to disclose to the market a notice, in accordance with the forms and manner provided for in paragraph 103 of the Financial Act and paragraph 39 of the Consob Regulations. In particular, the Financial Act provides that the board of directors of the target in its notice shall specify whether any fairness opinion has been issued to the board of directors of the target and, if so, the notice shall indicate the methodologies used and the results of each of such methodologies used for the fairness opinion.

Finally, in the context of mergers, the Italian Civil Code provides that the companies taking part in the merger shall produce an expert opinion on the merger ratio; however, in certain conditions such opinion might be waived by the shareholders of the companies taking part in the merger.