Golden Power: the Italian Government's powers over companies of strategic importance


​​​​​​​​​​​​​​published on 10 May 2024 | reading time approx. 5 minutes​

​The Golden Power is the power to impose conditions or even a veto or an opposition, which the Government may exercise on transactions involving companies engaged in strategic activities or holding assets strategic to the national interest.

This institute entails the obligation for the companies concerned to notify in advance to the Government the transactions they intend to carry out and may entail heavy penalties, in case of a violation.

The regulatory framework   ​

The Golden Power is a set of powers introduced and organically regulated by Decree-Law No. 21 of 2012, which marked Italy's adherence to the censures raised by the European Union, especially against the previous system of state shareholdings in privatized companies, involving veto rights or in any case special rights (Golden Share). The Decree-Law No. 21 of 2012 is accompanied by numerous other regulatory acts, especially secondary legislation, through which the objective and subjective scope, types, conditions and procedures for the Government's exercise of the aforementioned powers are detailed. The Golden Power regulation has been significantly expanded over the years, especially in the last five years, to the extent that the spectrum of transactions over which the Government may exercise the special powers has grown considerably.​

The strategic sectors

The Golden Power can be exercised in the defense and national security sectors, to which 5G technology has recently been added, as well as in areas of strategically important activities in the energy, transport and communications sectors. By virtue of European legislation, in particular EU Regulation No. 452 of 2019, the Italian legislator has introduced additional strategic areas, branching out and giving greater depth to the special powers, such as: water, insurance, artificial intelligence, biotechnology, the agri-food sector, media pluralism, etc.. 

The special powers of the Government  

In the security, defense and 5G sectors, a prerequisite for the exercise of special powers from the Government is the existence of a threat of serious prejudice to essential defense or national security interests. The Government, taking into account the principles of reasonableness and proportionality, may: impose conditions on the acquisition of shareholdings in companies with activities of strategic importance in these sectors; impose a veto against the adoption of resolutions, acts or operations of particular importance (mergers, demergers, assignments of property rights, etc.); oppose the acquisition of shareholdings if the purchaser comes to hold shareholdings that could jeopardize the above-mentioned interests. For the security, defense and 5G sectors, the special powers are exercised independently of the nationality of the person who, by reason of the transaction, obtains the assets or strategic relationships.

In the areas of energy, transport and communications, as well as in those introduced by EU Regulation No. 452 of 2019, the requirement for the exercise of special powers is instead the existence of an exceptional situation, not regulated by law, of threat of serious prejudice to public interests as with regards to the security and operation of networks and installations and the continuity of supplies. The types of powers and the way they are exercised have, with some differences, the same pattern as for national defense and security. However, in the energy, transport and communications sectors, as well as especially in those introduced by EU Regulation No. 452 of 2019, the nationality especially of the party taking possession of the assets or strategic relationships, especially whether or not the party belongs to the European Union, may sometimes be a requirement for the exercise of the special powers. 

The notification obligation

The transaction must be registered with the Government before it is carried out. In the case of an acquisition of a participation or of a business/part of a business, it must be made prior to closing. In the case of a corporate transaction, however, the notification must be made before the final resolution or final deed (e.g. in the case of a merger, before the final merger deed).

The notification should preferably be made by all the parties involved, including, in the case of a share deal, the target company of the takeover transaction (otherwise, it should be provided with a report on the transaction, in order to allow it to participate in the procedure and to be aware of its outcome). The content of the notification must be complete and inspired by the utmost transparency: it must describe not only the data and fields of activity of the companies involved, the strategic assets concerned, but also the business plan pursued with the operation, the elements for assessing the influence of the operation on national interests, etc..

The Government has 45 days to acknowledge the notification. This time limit may be suspended in the event of incomplete notification or the need to obtain information/opinions. Its unsuccessful expiry counts as silence-consent for the transaction. The practice, however, is for the Government to react within a shorter period of time (about 15 days) and to do so in any event, even by simply confirming that the transaction is not subject to the Golden Power regulation or that the conditions for exercising the special powers are not met.

Both a pre-notification procedure, with the aim of becoming aware in advance of the applicability or non-applicability of the Golden Power legislation on the transaction to be finalized, and further procedural simplifications have recently been introduced.

The sanctions

The penalties, whether for non-notification or for non-compliance with the Government's instructions, are considerable and, depending on the case, range from a fine of up to twice the value of the transaction or at least a certain percentage (between 1 per cent and 3 per cent) of the total turnover achieved by the companies involved in the last annual financial statements, to the nullity of the transaction in question and/or the obligation to restore the situation prior to the transaction. All of this is subject to the condition that the act itself does not constitute a criminal offence.
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