[Last updated: 1 January 2025, unless otherwise noted]
6.1 Inside information
An Italian company is obligated to immediately disclose to the public all "inside information" that relates to it, including all material changes in information that has already been disclosed to the public (see under 3.3 above).
6.2 In the event of a public takeover bid
Pending a voluntary takeover bid, any other bidder (including a so-called 'white knight') may launch a competing bid – up to five trading days before the end of the acceptance period of the prior takeover bid – provided that it gives immediate notice to CONSOB of the decision to launch said bid and publicly discloses such decision, as well as files the offering document (Documento di Offerta) concerning the bid, with CONSOB no later than 20 days from the prior notice (see under 3.6 above).
6.3 Insider trading and market abuse
In principle, the rules on insider trading and market abuse remain applicable before, during and after a public takeover bid, albeit that during a takeover bid additional disclosures and restrictions apply in relation to trading in listed securities (see under 3.3 above).
6.4 Common anti-takeover defense mechanisms
Anti-takeover defense mechanisms in Italy are subject to the applicability of three main rules:
(a) Passivity rule (or board neutrality rule)
The board of directors of the target company must abstain from adopting any action or having the company involved in any transaction that may adversely affect the achievement of the goals of a pending takeover bid, unless such action and/or transaction has been approved by the ordinary or extraordinary shareholders’ meeting respectively (depending on their respective areas of attributed decision-making powers). However, the articles of association of the target company may allow the board of directors to derogate, wholly or in part, from the passivity or board neutrality rule (opt-out system).
The passivity (or board neutrality rule) applies from the date of the Initial Notice until the end of the bid or until the bid expires. The mere search for other bids ('white knights') is not subject to such rule.
The following table summarizes the main anti-takeover defense mechanisms that, if adopted or engaged in pending a bid, must be authorized by the shareholders of the target company, unless the articles of association state otherwise:
Purpose of the defense | Mechanism |
(a) To increase the overall consideration to be offered by the bidder |
|
(b) To significantly vary the business characteristics of the target company |
|
(c) To prevent the successful conclusion of the bid |
|
(b) The breakthrough rule:
The articles of association of the target company may set forth the following provisions (opt-in system):
- any limitations on the transfer of securities envisaged in the articles of association shall have no effect on the bidder;
- any limitations on voting rights envisaged in the articles of association or shareholders’ agreements in cases where a shareholders’ meeting is called to authorize the actions or transactions referred to above under the passivity or board neutrality rule, shall have no effect on the bidder; and
- any limitations on voting rights envisaged in the articles of association or shareholders’ agreements or any special rights in relation to the appointment or removal of the directors or members of the management body or supervisory board envisaged in the articles of association shall have no effect at the first shareholders’ meeting of the target company following the end of the bid, called to amend the articles of association or to remove or appoint the directors, if as a result of the takeover bid the bidder comes into possession of at least 75% of the voting securities of the target company.
The articles of association of the target company may set forth the following provisions (opt-in system):The breakthrough rule applies for the entire duration of the acceptance period. As a result of the foregoing, other common anti-takeover defense mechanisms (such as clauses in the articles of associations aimed at hampering the renewal of the board by the bidder – including those providing for (i) a staggered board, (ii) supermajorities in case of appointment or removal of directors, (iii) rights of appointment and removal of directors specifically granted to holders of particular categories of securities – or clauses in shareholders’ agreements aimed at restricting the right to vote or the freedom to transfer the securities) are ineffective in the context of a takeover bid if the articles of association of the target company so provide.
(c) The reciprocity rule
The passivity (or board neutrality) rule and the breakthrough rule shall not apply to takeover bids launched by entities not subject to such rules or equivalent rules, or by a company or entity controlled by such entities. In other words, should the bidder not be subject to the passivity or board neutrality rule and/or the breakthrough rule (by operation of law or due to specific provisions of its articles of association), any anti- takeover defense mechanism may be adopted by the board of directors of the target company. However, under Italian law, the authority to adopt any such defensive measures by the board of directors of the target company must be expressly granted by the shareholders’ meeting at least 18 months prior to the date of the Initial Notice.
