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

Last Updated: 22 October 2014
Article by Stefano Crosio and Sara Rizzon

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 Applicable to Small and Mid Cap Listed Companies

New Definition of Small and Mid Cap Listed Companies

The Law Decree has introduced a new definition of "small and mid cap companies listed on the Italian stock exchange" ("SMC") in the Italian Financial Market Statute (i.e., Legislative Decree No. 58 of February 24, 1998) ("IFMS"). This definition is relevant because a special regime applies to SMCs.

Pursuant to the Law Decree, a listed company falls within the scope of the definition of "SMC" if (i) based on the most recently approved annual financial statements, its revenues do not exceed €300 million or, alternatively, (ii) its average market capitalization during the last calendar year is lower than €500 million.

Any listed issuer that, for three consecutive fiscal years or calendar years, exceeds both of these limits cannot be regarded as an SMC any longer.

New Tender Offer Thresholds for SMCs

With the aim of boosting listings of SMCs, the Law Decree affords SMCs the flexibility to amend their bylaws so as to set forth a mandatory tender offer threshold different from the general statutory one (30 percent for those SMCs that do not amend their bylaws as allowed by the Law Decree). The SMC bylaws may set their mandatory tender offer threshold within a range comprised between 25 percent and 40 percent.

The resolution to amend the SMC bylaws to introduce a customized mandatory tender offer threshold requires approval by a qualified majority of the shareholders. To protect the minorities, the Law Decree provides an exit right for those shareholders who do not vote in favor of the resolution, in the form of a right to withdraw from the issuer (see "Withdrawal Right," below).

The Law Decree also introduced a special regime for SMCs with regard to the so-called incremental tender offer, which is a type of mandatory tender offer that is triggered whenever someone holding a stake in an Italian listed company that is more than the applicable mandatory tender offer threshold and less than 50 percent acquires (or obtains multiple voting rights that account for) more than 5 percent of the voting shares of such company within any given 12-month period.

Under the new rules, the bylaws of the SMCs may opt out of the incremental tender offer requirement for the first five years following the IPO. By means of this exemption, the controlling shareholders of an SMC that is undergoing its IPO may get diluted to well below 50 percent as a result, while still retaining the possibility to build back their stakes by buying shares of the issuer on the secondary market even in excess of the general 5 percent per year limit during the five years following the IPO, without being required to launch an incremental tender offer for all the remaining shares.

New Threshold for Equity Disclosure Requirements in SMCs

Before the Law Decree, Article 120 of the IFMS provided that any person who either (i) holds more than 2 percent (or other greater thresholds) of the outstanding voting shares of any Italian listed issuer, or (ii) reduces the stake below such threshold must notify the issuer and CONSOB (the Italian market regulator).

With regard to SMCs, the Law Decree raised the 2 percent equity disclosure threshold to 5 percent.

The aim of this change is to encourage financial investors (especially foreign investors) to acquire larger stakes in SMCs without having to immediately disclose their investment strategy, provided that their overall stake remains below 5 percent.

Higher Thresholds for Cross-Holdings

The Law Decree has also raised the maximum thresholds for cross-holdings between SMCs, which have been increased from 2 percent to 5 percent in the base case and from 5 percent to 10 percent in case of prior approval by the shareholders' meetings of both of the concerned SMCs.

Shares with Multiple Voting Rights

The Law Decree introduced a new provision in the IFMS (Article 127-quinquies) pursuant to which listed companies may amend their bylaws so as to allow that, under certain conditions, the shares of the issuer grant more than one voting right to their holders.

This new rule completely overrides the principle "one share one vote," which has always been one of the pillars of Italian corporate law. Such change in law is in accordance with the recommendations included in the Action Plan for the Modernization of Company Law and the Consolidation of Corporate Governance of 2012, pursuant to which the European Commission invited the Member States to evaluate the opportunity to facilitate long-term investments in European companies, also by using instruments such as shares bearing multiple voting rights.

Since 2010, Italian listed issuers have been allowed to amend their bylaws to provide that those shares that are held in excess of a minimum holding period of not less than 12 months grant their holders (other than controlling shareholders) a dividend greater, by up to 10 percent, than that of the other common shares.

Now, pursuant to the Law Decree, listed issuers may amend their bylaws to provide that shares that are held in excess of a minimum holding period of not less than 24 months grant their holders multiple voting rights not to exceed two votes per share as a sort of "loyalty premium." Such multiple voting rights are designed to be a temporary feature of the shares to which they apply. In the case of transfer to a third party, the multiple voting rights lapse, and the shares transferred to the third party revert to regular, single-vote shares. Consequently, multiple voting right shares do not form a special class of shares. Also, as an exception to the multiple voting right prerogative, in those shareholders meetings held (pursuant Article 104 of the IFMS) to resolve upon the adoption of shark repellents or other defensive measures against a tender offer, each multiple voting right share counts for only one vote.

Subject to certain exceptions, multiple voting rights are taken into account to determine whether the applicable mandatory tender offer threshold or incremental tender offer threshold or equity holding disclosure threshold is exceeded.

The provisions regarding multiple voting rights are not immediately applicable, since CONSOB is required to implement the general principles set forth by the Law Decree by adopting a specific regulation by December 31, 2014.

Conversely, unlike in the case of private companies, Italian listed companies (subject to limited exceptions) may not issue new classes of shares that permanently grant their holders multiple voting rights.

Withdrawal Right

Before the entering into force of the Law Decree, the price to be paid to a shareholder who exercised the withdrawal right from a listed issuer in those circumstances that trigger it under applicable law (e.g., resolutions resulting in the delisting of a listed issuer, the move of the registered office abroad, changes in the shareholders' voting rights or economic rights or in the criteria for determining the consideration for withdrawing shareholders, etc.) could be determined only according to the criterion of the arithmetic mean of the closing prices of the relevant class of shares during the previous six-month period.

As a result of the changes introduced by the Law Decree, Article 2437-ter of the Italian Civil Code has been amended such that the this six-month arithmetic mean has become a floor to determine the price to be paid to withdrawing shareholders, provided that the bylaws of listed issuers may now provide for other criteria for its determination (subject to such floor), including criteria that take into account the equity of the company and its income prospects. 


1 The Law Decree was published in the Italian Official Gazette No. 144 of June 24, 2014, and has been in force since the day following its publication (i.e., June 25, 2014). The conversion law was published in the Italian Official Gazette No. 192 of August 20, 2014, and entered into force the day following its publication. In consequence of the above, any reference in this document to the Law Decree shall mean to refer to the Law Decree as converted into law with amendments by the conversion law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions