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Italian government “golden powers” and related filing obligations for investors

  • Italy
  • Competition, EU and Trade


Italian law provisions on the so-called “golden power” and related procedure adopted in March 2012 (Law Decree 15 March 2012, no. 21) and recently amended by a law decree adopted in October 2017 (Law Decree 16 October 2017, no. 148/2017), the latter being applicable for all transactions started after 16 October 2017, provide that the Italian Government shall review acquisitions of stakes in Italian public and private companies which have activities of “strategic relevance" in the defence and national security sector or which hold “assets with strategic relevance” in the energy, transport, communication and high-tech sectors.

In particular, the Italian government may veto or impose specific restrictions or conditions in the event of significant transactions concerning acquisitions by Italian, EU, or non-EU foreign investors of interests in Italian entities operating in the defence and national security sector, or of acquisitions by non-EU nationals of controlling interests in Italian entities. The power entrusted to the government is to review any transaction which (i) in the defence and national security sectors may damage or constitute a material threat to Italy’s essential interests and (ii) in the energy, transportation, communication and high-tech sectors may damage or constitute a material threat to the Italy’s fundamental interests relating to the security and the operation of networks and systems, the continuity of supplies and the preservation of high-tech know-how.

The types of transactions that might be covered are various in nature and may include deals structured as stock or asset purchases, mergers, joint ventures where the foreign partner is investing in an Italian business as well as transactions or corporate actions which may have the effect of changing the ownership structure or the purpose of a certain target company, or winding up the target company’s business.

The general principles and reciprocity conditions apply so that in cases of purchase of shareholdings in companies doing business in the strategic sectors by non-EU persons and/or entities, the transaction shall not be permitted insofar as the access of Italian operators to the same strategic sectors in the domestic countries of such investors, conditions being equal, is not allowed by the domestic legislation.

The amendments made in 2017 have further extended the scope of the Italian Government golden powers to “high tech intensive” industries in order to verify whether any danger is posed to national security or public order in critical areas such as data management, dual use technology and infrastructures.

Filing obligations

On the basis of such legal framework, transactions and investments in companies active in the strategic sectors are subject to a statutorily filing obligation, to be made in advance of completion, to the Italian Government, which may veto the deal or impose specific conditions to ensure the protection of the interests safeguarded by the rules.

The notification shall be made by the company itself or by the seller/purchaser, respectively, in relation to (i) any relevant resolutions adopted by a company and (ii) any acquisition of ‘interests’ in a company by a foreign investor, as long as the company exercises any strategic activity in the defence and national security sectors or holds any strategic asset in the communication, energy, transport, and high-tech sectors.

Moreover, any investor in equity interests of a listed company operating in the defence and national security sector must notify such acquisition if it exceeds the thresholds of 3%, 5%, 10%, 15%, 20% and 25% of the share capital.

Procedure and fines for non-compliance

With respect to the timeline, the filing shall be made within 10 days following the acquisition or the adoption of the relevant resolution, as applicable. Upon receipt of the filing, a standstill period of 15 days begins during which the Italian Government will carry out the review of the envisaged investment or resolution, and any voting right attached to the acquired interest is frozen until the date in which the Italian Government resolves whether or not to exercise its powers. In the event that the Italian Government requests additional information, the above 15-day term may be extended only once and for a maximum period of 10 additional days. If the Italian Government does not exercise its powers before the conclusion of the standstill period (as possibly extended), the transaction or the resolution can be legitimately implemented, and thus the procedure can be considered completed through a failed objection of the Italian Government after the relevant term has elapsed (so called “silenzio assenso”).

The failure to comply with the obligation to notify (and not just the non-compliance with the procedure as a whole) is punishable by significant and harsh administrative fines, ranging from a minimum of 1% of the combined turnover of the undertakings involved to a maximum of double the transaction value.

Recent cases of exercise of the golden powers

Back in June 2018, the Italian government has taken the step of using its golden powers over the fiber-optic network group Retelit in order to safeguard its network (12,500 km of fiber-optic cables) and keep its management and security operations in Italy. Another recent case related to the Vivendi/Telecom deal in October 2017, when the Italian government exercised the golden power over Vivendi and thus signed a decree ordering Telecom Italia-TIM to install state-backed directors and a special appointee to handle security matters and gave the operator a 90-day term to comply with a number of additional requirements. The government, in particular, decided to exercise the golden power after the Italian financial services authority Consob ruled that Vivendi had reached a position such to hold a “de facto control” of Telecom Italia-TIM via a 24% stake and two-thirds of the company’s board members, a finding that Vivendi challenged in court.