Italy's New Rules For Listed Small And Mid Caps And Other Changes Relevant To Listed Issuers

The Italian Council of Ministers enacted Law Decree No. 91 of June 24, 2014 (the "Law Decree"), which introduced new measures aimed at ensuring the country's future sustainability and growth. As part of such new measures, the Law Decree introduced significant changes to certain corporate and capital market rules applicable to both listed and private companies. The Law Decree was converted into law and confirmed by the Italian Parliament on August 11, 2014, with limited changes.1 This Commentary will focus on the set of changes regarding companies listed on the Italian stock exchange.

New Rules for Listed Companies—General Overview

The main changes introduced by the Law Decree that apply to listed companies can be summarized as follows:

The mandatory tender offer threshold has generally been reduced from 30 percent to 25 percent, except under certain circumstances. A special regime applies to small and mid cap listed companies. The bylaws of listed companies may now provide that, subject to a minimum holding period, shares grant multiple voting rights. Listed companies may choose additional criteria to determine the price to be paid to withdrawing shareholders (beside the arithmetic mean of the closing prices in the preceding six months). The following paragraphs will describe more in detail each of the four categories of amendments.

New Tender Offer Threshold

As a general rule, before conversion into law of the Law Decree, Italian provisions regarding mandatory tender offers required whomever acquired a stake in excess of 30 percent of the outstanding voting shares in an Italian listed company to launch a tender offer for all the remaining shares of that company at an equitable price to be determined in accordance with Italian law.

The Law Decree (as amended by the conversion law) reduced from 30 percent to 25 percent the mandatory tender offer threshold for all listed issuers, subject to two exceptions. In light of the new rule, whoever acquires a stake in excess of 25 percent of the outstanding voting shares in an Italian listed company will be required to launch a tender offer for all the remaining shares of the company, provided that: (i) there is no other shareholder holding a stake higher than 25 percent in the target company (otherwise, the 30 percent threshold would still apply); and (ii) special rules apply to small and mid cap companies (see "New Regime Applicable to Small and Mid Cap Listed Companies," below).

New Regime...

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