The new Italian golden power legislation (namely, the Law Decree 21/2012) is 7 years old and grants the Italian Government with veto rights over investments and agreements in the defence & national security sector and in networks, plants, assets and relationships deemed strategic for the national interest in the fields of energy, transportation and communications.
Since 2017 this law has been repeatedly amended to broaden its scope by extending it to “highly intensive technology” services, assets and infrastructures and 5G technologies.
All these changes come along the ongoing debate on foreign investments taking place at USA, EU and national level to address the concerns raised in respect of takeover of European companies with key technologies and strategic assets by certain investors, in particular state-owned enterprises investing as part of that country’s strategic industrial policy.
Foreign investors may increasingly need to assess whether their investments in the EU Countries raise security or public order concerns and, in such a case, consider their notification strategies in the relevant countries.
2. Relevant Sectors and EU Context
The Italian Government’s golden powers apply to the following sectors:
a) defense & national security;
b) networks, plants, assets and relationships deemed strategic for the national interest in the fields of energy, transportation and communications;
c) those (sectors) provided for in article 4, paragraph 1 of the EU Regulation 452/20191, in case of extra EU investors;
d) agreements with extra EU counterparties concerning the acquisition (in any manner) of services and supplies for the project, execution, management and maintenance of 5G broadband electronic telecommunication networks based on 5G technology.
The scope of the provision of law, and particularly Paragraphs c) and d), is the result of a progressive enlargement intended to cope with the new issues raised by technological innovation and related concerns about cybersecurity and national security.
The Italian Parliament has lastly amended the golden power legislation on 18 November 2019 by the Law 133/20192. The changes are aimed at harmonizing the national legislation with the European Regulation and strengthening the Government’s powers; in particular it has been added and clarified that:
i) in case of extra EU investors, the Government may rely its evaluation for the exercise of the golden powers also on the fact that (i) such investor is directly or indirectly controlled by the government of a foreign Country, not part of the European Union, also via significant financing and not only via direct or indirect shareholding; (ii) the investor has already been involved in activities affecting the national security or public order of a EU Country; and/or (iii) there is the serious risk that the investor carries out illegal or criminal activities;
ii) extra EU investors are (x) any legal or natural person not having the registered office, the main business or the residence in any EU or SEE Country, (y) any legal or natural person having the registered office, the main business or the residence in any EU or SEE Country but that is directly or indirectly controlled by any of the entity provided for in paragraph (x); (z) any legal or natural person having the registered office, the main business or the residence in any EU or SEE Country when there is evidence to suggest circumvention of the golden power legislation;
iii) the President of the Government (in place of the President of the Republic) is in charge of enacting the implementing decrees required to identify/update the list of assets and networks subject to the golden powers;
iv) the agreements for the acquisition of 5G services and supplies entered into before 26 March 2019 and not yet executed shall be disclosed by the notifying party and are subject to a transitional legal regime;
v) the term within the notification procedure by which the Government may exercise the golden powers is extended from 15 to 30/45 days.
The identification of the relevant assets and networks in the fields of defense & national security, energy, transportation and communications is almost set since 2014.
What has to be detailed in the implementing regulations is the provision under Paragraph c) mainly related to tech assets and networks; these implementing regulations have not been issued yet.
With respect to the EU, Italy (as any other Member State) keeps the last word whether a specific investment should be allowed or not in its territory.
However, after the approval by the Council of Europe on 5 march 2019 of the EU Regulation 2019/452, an investor should also consider if the prospected investment may concern projects or programs of EU interest, such as projects involving EU funds.
Click here for full article.