Italy: corporate law updates and innovations

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Marco Monaco Sorge
Tonucci & Partners, Rome


The Corporate Governance Committee, formed in 2011 by the Italian Banking Association; the Italian Association of Insurance Companies; the Association of Italian Joint Stock Companies; the main Italian Association of Manufacturing and Service Companies; the Investors’ Association; and by the Italian Stock Exchange, was approved and published, on 31 January 2020 – the new edition of the Corporate Governance Code (‘2020 CG Code’). This was formerly referred to as the Code of Self-Discipline and approved in July 2018.

Already at the Corporate Governance Conference, held on 9 and 10 December 2019 in Milan at the Italian Stock Exchange,  this latest edition of the 2020 CG Code had been announced and the 2019 Report on the Code’s application and the 2020 Committee Recommendations (‘2020 Recommendations’) was approved and published on the same day.

Recipients and application

Joint-stock companies (‘SpA’) with publicly traded shares that decide to adopt the 2020 CG Code, can start applying it as of fiscal year 2021 and must subsequently inform the market in their reports on corporate governance and ownership structures, which will be published in 2022.

In the meantime, the previous version of the document (the Code of Self-Discipline approved in July 2018) remains applicable.

The ‘Guiding Principles and Summary of Key Elements of the 2020 CG Code and 2020 Recommendations’ include:

  • simplification;
  • the drawing up of six articles containing principles (goals of good governance) and recommendations (behaviours appropriate to implement the stated goals);
  • deletion of comments (contained in the Code of Self-Discipline of July 2018);
  • introduction of various definitions, including for directors, board of directors and board of statutory auditors, business plan, company with concentrated ownership, large company, sustainable success;
  • neutrality versus the governance system adopted by companies;
  • voluntary adherence clearly stated in the respective reports on corporate governance and ownership structures;
  • ‘comply or explain’, in whole or in part,with prevalence of substance over form;
  • graduation of the principles and recommendations in relation to the size and ownership structure of the company, inspired by principles of flexibility and proportionality;
  • introduction of the concept of success and sustainability of corporate business to create long-term value;
  • implementation of dialogue with shareholders (so-called engagement), relevant stakeholders (workers, creditors, consumers and others), institutional investors and asset managers;
  • implementation of timely reports to the Board prior to meetings and a confidentiality policy;
  • greater relevance and presence of non-executive and independent directors;
  • implementation of diversity, gender and independence criteria and related assessments and audits;
  • adequacy and sustainability of the remuneration of executive and non-executive directors and members of the Board of Statutory Auditors, also in consideration of the so-called environmental, social and governance pre-requisites; and
  • appointment and role of a lead independent director (if applicable).

Expansion of the ‘Golden Power’ regime for the protection of certain Italian assets and interests in case of foreign direct investments

Among the extraordinary measures adopted by the Italian Government for tackling the effects of the Covid-19 pandemic,  Article 15 of the Law Decree No 23 dated 8 April 2020 (the so-called ‘Decreto Liquidità’ or ‘Liquidity Decree’) and converted into law by Law No 34 dated 19 May 2020) temporarily (until 31 December 2020) extended the special ‘Golden Powers’ of the Italian Government in the case of market transactions and acquisitions of assets and controlling shares exceeding certain thresholds (ten per cent, 15 per cent, 20 per cent, 25 per cent and 50 per cent) by other European Union and non-European Union opportunistic investors and entities. 

In essence, with the aim of protecting Italian strategic and essential interests and assets, the newly updated scope of application of the Golden Power regulation has been expanded and now includes the following sectors: defence; security; energy; transportation; communications; credit; finance; insurance; health; supply of certain materials; information and data; food safety; and high-technology.

The Italian Government is now allowed to autonomously start an investigation and review in the absence of the related notification, as well as being entitled to special discretionary powers, including veto and imposition of special terms and conditions, as well as sanctions, in the case of a breach of the related obligations and provisions.

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