On 20 May 2022, The Italian Parliament confirmed Law-Decree No. 21/2022 which the Government had enacted in March 2022 to introduce certain significant changes to the Italian rules on foreign investments review (FIR) in response to the invasion of Ukraine by Russia (see our article here). The result is Law No. 51 dated 20 May 2022 (Law 51/2022).

By way of background, in the Italian constitutional framework, the issuance of State-wide laws falls within the domain of Parliament. However, in case of urgency (such as, in this case, the economic and humanitarian emergency created by the Russian invasion), the Government — rather than the Parliament — may issue so-called law-decrees which have the same binding nature as Parliament-enacted laws, except that law-decrees enacted by the Government remain in force for maximum 60 days. In such period of time, Parliament may approve the law-decree, or approve it with amendments or else let the 60-day term expire, thus essentially rejecting the law-decree. In this last hypothetical, the law-decree would cease being in force.

Now, with Law 51/2022, Parliament not only approved the governmental Law-Decree 21/2022, but also added significant changes to the FIR regime in several business sectors, including the TMT industry. Such changes include:

1. the expansion of the mandatory FIR notification to, and clearance by, the Italian Government. This, in fact, applies not only to the change of control over companies holding strategic assets, but also to the incorporation of new companies (NewCos) which carry out activities or holding assets that are strategic for FIR purposes, if one or more non-EU individuals or entities hold at least 10% of the corporate capital of, or the voting rights in, the NewCos;

2. the expansion of the definition of non-EU individual or entity. These are:

  • any individual who is not a citizen of a EU Member State or who is a citizen of a EU Member State, but is not resident, or does not have the main place of business, in the EU or in the European Economic Area (EEA);
  • any entity that does not have its registered office, place of management or main place of business within the EU or the EEA;
  • any entity that has its registered office, place of management or main place of business within the EU or the EEA, but which is directly or indirectly controlled by individuals or entities that fall within (i) or (ii) above;
  • any individual or entity that has the citizenship/nationality of a EU or EEA Member State or that has established therein the residency, registered office, place of management or main place of business, if there are elements that suggest the intent to circumvent the FIR rules.

This is a significant new development in the FIR landscape as investors and multinational groups establishing a new presence in Italy via a NewCo will need to factor in the timing necessary for the FIR notification and governmental clearance to set up the new presence. This is similar, though, to what investors and multinational groups already had — and still have — to factor in if they were to acquire an already existing company holding strategic assets in the Italian territory.

For more information please contact Raffaele Giarda, Antonio Lattanzio, Guido Pinto or Camilla Ambrosino