Equity capital markets in Italy: regulatory overview

A Q&A guide to equity capital markets law in Italy.

The Q&A gives an overview of main equity markets/exchanges, regulators and legislation, listing requirements, offering structures, advisers, prospectus/offer document, marketing, bookbuilding, underwriting, timetables, stabilisation, tax, continuing obligations and de-listing.

To compare answers across multiple jurisdictions visit the Equity Capital Markets Country Q&A tool.

This Q&A is part of the global guide to equity capital markets law. For a full list of jurisdictional Q&As visit www.practicallaw.com/equitycapitalmarkets-guide.

Lukas Plattner, Nctm Studio Legale

Main equity markets/exchanges

1. What are the main equity markets/exchanges in your jurisdiction? Outline the main market activity and deals in the past year.

Main equity markets/exchanges

Borsa Italiana SpA (www.borsaitaliana.it) is the Italian stock exchange that manages regulated and unregulated equity markets.

There are two regulated markets in Italy.

  • The Screen-based Stock Exchange (Mercato Telematico Azionario) (MTA) is the main Italian equity market and the electronic stock exchange in which shares, convertible bonds, stock options and warrants are negotiated. It is subject to strict requirements that meet the highest international standards and guarantee the capacity to attract institutional investors and private individuals. The MTA has three segments:

    • MTA, which is the ordinary market.

    • MTA STAR, which is dedicated to small and mid-cap companies that undertake to meet standards of excellence in terms of transparency, communication, liquidity and corporate governance.

    • MTA International, which is dedicated to shares of foreign issuers already traded on other EU regulated market.

  • The Electronic Investment Vehicles Market (Mercato Telematico Degli Investment Vehicles) (MIV) was created with the aim of offering funds, liquidity and visibility to investment vehicles with a clear strategic vision. It is the market for the trading of shares of investment and real estate investment companies. The MIV has four segments:

    • closed-ended fund segment, where the shares and securities of closed-ended funds and real estate funds are traded;

    • investment companies segment, where the shares of investment companies are traded;

    • professional segment, which is accessible only to professional investors, and where special investment vehicles (such as structured investment vehicles (SIVs) and special purpose acquisition companies (SPACs)) are traded. This segment includes the securities of companies whose investment policy is particularly complex, such as multi-strategy vehicles;

    • real estate investment companies segment (REIC).

Unregulated markets sit under the Multilateral Trading Facility and are also managed by Borsa Italiana SpA. The unregulated markets are:

  • Alternative Capital Market (Mercato Alternativo del Capitale) (AIM Italia), which is dedicated to small and medium companies with high growth potential.

  • Trading After Hours (TAH), which is dedicated to trading after hours and is open to both retail and professional investors. A selection of the most liquid shares traded on the MTA (including the MTA International) is admitted to trading on the TAH.

Market activity and deals

At the end of 2014, there were:

  • 285 companies listed on the MTA.

  • 57 companies listed on the AIM Italia.

At the end of 2014, the aggregate capitalisation of listed companies reached EUR723 billion, broken down as follows:

  • MTA (domestic): EUR702 billion.

  • MTA (foreign): approximately EUR19 billion.

  • MTA International: EUR1.3 billion.

The majority of trade (EUR702 billion) related to the shares of domestic companies, while trading on the MTA International had a sharp decrease (-31%) on the previous year. Capitalisation with respect to the MTA on the Italian GDP increased slightly from 28.6% in 2013 to 29.5% in 2014.

At the end of 2014, the capitalisation of domestic companies on the MTA of the Italian stock exchange stood around EUR466 billion (+4.7% on the previous year). The market capitalisation of the AIM Italia has nearly doubled, from EUR1.2 billion to EUR2 billion.

There were 26 IPOs in 2014, out of which five were listed on the MTA market, and 21 were listed on the AIM Italia. According to Borsa Italiana SpA data, a total funding of EUR14 billion was raised in 2014, of which EUR2.9 billion was in IPOs and EUR11.1 billion was in capital increase.

The following companies were listed in 2014:

  • MTA: Anima Holding, Cerved Information Solutions, Finecobank, Fincantieri e Rai Way.

  • AIM: Agronomia, Axélero, Bio-On, Blue Note, Ecosuntek, Energy Lab, Expert System, Gala, Go Internet, Gruppo Green Power, Iniziative Bresciane, Lucisano Media Group, MailUp, Modelleria Brambilla, MP7 Italia, Notorious Pictures, PLT Energia, Sunshine Capital Investments, Tech-Value, Tecnoinvestimenti, Triboo Media.

Five companies postponed their IPOs because of the instability of the Italian capital markets.

Share trading reached a daily average of EUR2.9 billion (a 33.6% increase on the daily average for 2013) and over 264,500 contracts ( a 17% increase on the numbers for 2013). A total of 66.2 million contracts were traded for a total budget of more than EUR720.3 billion.

The maximum daily value traded was reached on 16 October 2014, with EUR 5.7 billion and 538,734 trades.

2. What are the main regulators and legislation that applies to the equity markets/exchanges in your jurisdiction?

Regulatory bodies

The regulatory authorities that supervise equity capital market are:

  • Italian Securities and Exchange Commission (Commissione Nazionale per le Società e la Borsa) (Consob) which is the independent authority that supervises and regulates the Italian securities market and listed issuers.

  • Central Bank of Italy (Banca d'Italia) which supervises banks and other financial intermediaries.

  • Institute for the Supervision of Insurance (Istituto per la Vigilanza sulle Assicurazioni) (IVASS), which supervises and regulates insurance companies.

  • Borsa Italiana SpA, which is the Italian stock exchange that manages its own markets.

Legislative framework

The set of rules governing the legislative framework of the Italian equity markets consists of:

  • Italian Consolidated Financial Act, Legislative Decree 58/1998, which governs all legislation applicable to companies' and intermediaries' public offerings, tender offers and listed companies operating in both the regulated and unregulated equity capital markets (www.consob.it).

  • Italian Consolidated Banking Act, Legislative Decree 385/1993, which governs the rules applicable to banks and financial intermediaries. It also sets out some provisions regarding the issue of securities (www.bancaditalia.it).

  • Consob regulation No 11971/1999 and 16191/2007, which implements the Italian Consolidated Financial Act provisions concerning issuers and intermediaries (www.consob.it).

  • Borsa Italiana SpA regulations for the functioning of its markets, such as the Rules of the Markets organised and managed by Borsa Italiana SpA, and Rules concerning AIM Italia, which are also implemented by instructions (www.borsaitaliana.it).


Equity offerings

3. What are the main requirements for a primary listing on the main markets/exchanges?

Main requirements

To be listed on one of the markets managed and directed by the Borsa Italiana SpA, a company must:

  • Be regularly established.

  • Have its bye-laws on corporate matters conform to the Italian regulations to which they are subject.

Financial instruments must be issued in compliance with the law and regulations to which they are subject. They must be freely negotiable and be suitable for settlement services and for trading in a fair, orderly and efficient manner.

Foreign issuers must meet the legal requirements of the country in which the issuer has its registered office or in which financial instruments have been issued. In addition, the issuer must meet the prospectus requirements set out by the Italian and European regulations. The foreign issuer must also prove that there are no impediments to their compliance with rules and regulations to which they are subject, and that the issued financial instruments do not contain any kind of impediment in terms of the rights that can be exercised.

The MTA market is characterised by:

  • Access through the publication of a prospectus approved by the supervisory authority (Consob).

  • Approval by the supervisory authority of the mode of operations.

  • Transparency requirements (continuous, periodic, episodic), governance and accounting standards (statutory audit/International Accounting Standards (IAS)).

  • Larger companies.

The admission requirements for the AIM Italia market are less strict:

  • There are no requirements concerning the minimum and maximum size of the company in terms of capitalisation but the free float must be 10%.

  • It is dedicated to small to medium-sized enterprises (SMEs) to finance their growth.

  • The access rules are simpler and there are less stringent requirements in terms of corporate governance.

Access to the AIM is regulated exclusively by Borsa Italiana SpA. Admission to listing on the MTA market is regulated by Consob on the basis of both formal and substantive requirements.

Minimum size requirements

Among other formal requirements, admission to the MTA market requires a minimum capitalisation of EUR40 million and a free float of at least 25% of the share capital (the MTA STAR requires a free float of at least 35%).

A company must also have the following substantive requirements to be admitted to the MTA market:

  • A clear strategic vision.

  • A strong competitive position.

  • Financial sustainability.

  • High transparency and high level of communication.

  • Managerial autonomy.

These requirements are intended to increase the company's ability to create shareholder value. All companies listed on the MTA market are recommended to adopt the Code of Behaviour/Best Practice (the adoption of which is mandatory for companies listed on the MTA STAR). The following minimum size requirements also apply:

  • MTA: market capitalisation of at least EUR40 million and a free float of at least 25%.

  • MTA STAR: market capitalisation of more than EUR40 million and less than EUR1 billion at IPO and a free float of at least 35% at IPO and no less than 20% after the IPO.

  • MTA International: shares that have been listed on another EU regulated market for at least 18 months are eligible for admission without the requirement to publish a prospectus.

  • MIV: market capitalisation of at least EUR40 million (or EUR25 million for closed-ended funds which invest in securities) and a free float of at least 25% for investment companies and at least 35% for REICs and SIVs.

  • AIM: there is no minimum market capitalisation but there is a minimum free float of at least 10%.

  • TAH: There are no applicable minimum size requirements.

Trading records and accounts

MTA issuers must:

  • Carry out their activities in conditions of management autonomy and pursue activities which generate revenue directly or through subsidiaries.

  • Have published and filed stand-alone or consolidated financial statements for the last three years, the last of which must be accompanied by an auditor's opinion.

  • Provide pro-forma documents together with the auditor's report (if they are the result of extraordinary corporate operations).

  • Have appointed an auditing firm to audit their annual accounts.

MIV issuers must:

  • Carry out their activities in conditions of management autonomy and pursue a defined investment policy.

  • Have published and filed stand-alone or consolidated financial statements for the last three years, the last of which must be accompanied by an auditor's opinion.

  • Provide pro-forma documents together with the auditor's report (if they are resulting from extraordinary corporate operations).

AIM Italia issuers must provide an Admission Document (there is no requirement to provide a prospectus under Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading (Prospectus Directive)). The market is based on the presence of a key figure: the Nominated Adviser (Nomad), which is the liable party in respect of Borsa Italiana SpA, and is responsible for evaluating the appropriateness of the issuer for admission and later to assist it throughout the IPO and beyond.

The rules applicable to a company listed on the AIM Italia are less strict than those for the MTA market, and companies must:

  • Abide by the scheme provided by the Civil Code for unlisted companies in respect of:

    • majorities at the shareholders' meeting;

    • conferring proxies;

    • challenging resolutions to increase capital;

    • withdrawal rights;

    • rights offers.

  • Have transparency in their ownership structures.

  • Comply with the disclosure requirements for those who have significant holdings (5% or more).

  • Comply with the rules for tender offers (+30%).

  • Provide periodical financial information and on-going information (yearly and half-yearly).

  • Provide all price sensitive information for investors to the market immediately.

  • Comply with the rules concerning shareholder meeting approval for:

    • reverse takeover;

    • substantial changes in the business;

    • revocation of admission to listing.

Shares in public hands

The following are the minimum free float requirements:

    4. What are the main requirements for a secondary listing on the main markets/exchanges?
    5. What are the main ways of structuring an IPO?

    There are two main ways of structuring an IPO, namely:

    • Offer for subscription. This is an offer to subscribe for newly issued shares which are functional to the IPO.

    • Offer for sale. This is effected through a sale of existing shares from a selling shareholder.

    Companies can also be listed in the following two ways:

    • Pure listing. Companies with shares widely held by the public can apply for a listing process to Borsa Italiana SpA and Consob, without offering shares to the market.

    • Merger and demerger. Where an unlisted company is merged/demerged with/in a listed issuer (the shareholder(s) of the unlisted company receive shares of the listed issuer in exchange).

    6. What are the main ways of structuring a subsequent equity offering?

    The main ways of structuring a subsequent equity offering are through:

    • A share capital increase. This is an offer to subscribe for newly issued shares either through a public offer or through an offer to institutional investors.

    • A secondary offering. This is an offer to purchase issued shares, made to the public or to institutional investors by one or more selling shareholder.

    7. What are the advantages and disadvantages of rights issues/other types of follow on equity offerings?

    According to Regulation (EU) 486/2012 amending Regulation (EC) No 809/2004 on the format and content of the prospectus, base prospectus, summary and final terms and regarding disclosure requirements, which was intended to simplify and to rationalise the disclosure obligations for listed companies, certain rights offerings are subject to a simplified prospectus scheme. The scheme is applicable to companies which:

    • Are already listed on regulated markets.

    • Want to offer shares of the same class as those already admitted to trading.

    A simplified prospectus can omit the information on the following:

    • Economic and financial performance.

    • Selected financial data of the last three years.

    • Issuer's capital resources and cash flow.

    • Characteristics of any significant subsidiaries.

    • Information about property, plant, equipment and environmental issues.

    • History and development of the issuer.

    • Information on investments, transactions with related parties and on relevant contracts older than a year.

    • Changes to the share capital of the issuer.

    • Research and development over the last three years.

    • Employees.

    • Directors' remuneration.

    • Corporate governance.

    • Certain financial information before the last financial year.

    • Detailed description of the main activities and main markets.

    8. What are the main steps for a company applying for a primary listing of its shares? Is the procedure different for a foreign company and is a foreign company likely to seek a listing for shares or depositary receipts?

    Procedure for a primary listing

    The main steps for a company applying for a primary listing of its shares though an IPO are as follows:

    • Introduce appropriate corporate governance provisions before the IPO in order to ensure compliance with the relevant Italian regulations.

    • Undertake due diligence.

    • Draft a prospectus and file it with Consob.

    • Receive authorisation from Consob to publish the prospectus.

    • Price and placement of the shares.

    • Prepare the application for admission to listing and submitting it to Borsa Italiana SpA.

    • Obtain admission to listing from Borsa Italiana SpA.

    The procedure for a primary listing on AIM Italia is as follows:

    • Undertake due diligence.

    • Draft the Admission Document.

    • Price and placement of the shares.

    • Obtain admission to listing and publish the Admission Document.

    Procedure for a foreign company

    The listing procedure for a foreign company is similar to the one for an Italian company.


    Advisers: equity offering

    9. Outline the role of advisers used and main documents produced in an equity offering. Does it differ for an IPO?

    Global co-ordinators

    Appointed by the issuer, global co-ordinators are banks which co-ordinate public and institutional offerings on a global basis.

    Global co-ordinators must:

    • Supervise the equity offering process.

    • Co-ordinate the underwriters and any other specialists (such as the auditors and independent lawyers).

    • Inform the company about strategy and timing of the offer.

    • Provide the company with information on market conditions and their impact on the offer.

    • Estimate the demand for the company's shares.

    • In the IPO process, advise the issuer on preparing the business, corporate governance requirements and compliance with the requirements of the exchange listing.

    • Execute the underwriting agreement and institutional underwriting agreement with the issuer.


    Underwriters are banks and financial institutions which undertake to purchase or subscribe for a given amount of the offered shares. An underwriter is an intermediary member of a placement syndicate that agrees to underwrite the securities not placed with the public. In a placement through syndicate or through consortium, the underwriter is the intermediary who agrees to buy the unplaced shares in order to ensure the placement of the entire amount in issue. Underwriters receive a commission-based underwriting fee.


    The sponsor is a financial intermediary that mainly assists the company through the pre-listing process. The sponsor is responsible for:

    • Informing Borsa Italiana SpA of the submission of all required documents and facts regarding the issuer that have come to its knowledge that Borsa Italiana SpA must take into consideration.

    • Making sure that the company's corporate bodies are aware of the company's and their own continuing obligations both before and after the IPO.

    • Ensuring that the issuer's financial data and information are based on well-founded assumptions.

    • Ensuring that there is no evidence, on the base of a conformity check carried out during the listing process, that the issuer has failed to adapt its organic structure to conform with the necessary internal controls and financial procedures imposed by the various regulations.

    The sponsor must publish two research reports about the company and arrange professional meetings with the national and international financial community for at least two years after the listing.


    The specialist is an approved intermediary appointed directly by the company before being admitted to certain markets. The specialist must:

    • Support and guarantee the liquidity of securities traded in the market.

    • Arrange and attend at least two meetings a year between the company's management and professional investors.

    • Every year, produce or have produced in its own name at least two researches on the issuer (as defined in Article 65 of Consob Regulation 11971/1999) . This must be prepared promptly and in accordance with the highest standards on the occasion of the publication of the results for the year and the half-year. The researches must be made public in accordance with the procedures and time limits established in the Instructions.


    Lawyers have various duties at different stages of the listing, but generally they will:

    • Advise the company on the relevant legal and tax aspects, both pre- and post-listing.

    • Assist the company with the legal structure and timing of the offer.

    • Assist the company with undertaking due diligence, drafting the prospectus and any other offering circulars in accordance with the Prospectus Directive and Regulation (EC) 809/2004 implementing Directive 2003/71/EC as regards prospectuses and dissemination of advertisements (Prospectuses Regulation).

    • Advise the underwriters on any legal and tax aspects relating to the offer, including compliance with securities laws and regulations.

    • Prepare report guidelines, draft research and memoranda on the publicity and the IPO process.

    • Draft comfort letters to the sponsor and the underwriters.

    Independent auditor

    The independent auditor is normally appointed directly by the company during the IPO process. The independent auditor must verify that:

    • The company's accounts were properly maintained and its transactions were correctly reported in the accounting records.

    • The company's annual and consolidated accounts respond to the results of the accounting records.

    The independent auditor must prepare the following documents:

    • Reports on the annual accounts on a stand-alone and consolidated statement of the issuer (for the previous three years).

    • Report on the six-month interim balance sheet and income statement of the issuer, if required.

    • Report on the financial and accounting procedures.

    • Report on the estimates and forecasts included in the prospectus (if included).

    • Comfort letters addressed to the sponsor and the underwriters.

    • Report on the procedures which the company followed in preparing a business plan.

    Public relations consultants

    Public relations consultants create the communication strategy which assists the company in obtaining positive feedback among those participating in the market (for example, they will handle press relations).


    Equity prospectus/main offering document

    10. When is a prospectus (or other main offering document) required? What are the main publication, regulatory filing or delivery requirements?

    An issuer that intends to make a public offering must produce a prospectus which is approved by Consob and contains all the necessary information to enable investors to reach an informed assessment of the financial position, economic performance and prospects of the issuer (Article 94, Italian Consolidated Financial Act).

    A prospectus is required when the company:

    • Applies for an IPO.

    • Has listed or widely distributed shares or convertible bonds.

    • Offers new securities.

    • Applies for the listing of the newly issued shares representing more than 10% of the share capital of a listed company.

    The issuer must publish the prospectus once Consob provides the required authorisation.

    A foreign issuer's shares can be admitted to the MTA International without publishing a prospectus provided that:

    • The shares have already been traded on another European regulated market.

    • The shares have not been the subject of a de-listing decision in the 12-month period preceding the application to Borsa Italiana SpA.

    • The issuer is subject to disclosure obligations which are similar to those set out in Italian laws.

    11. What are the main exemptions from the requirements for publication or delivery of a prospectus (or other main offering document)?

    Exemptions from the requirement for a prospectus include offers:

    • Addressed to fewer than 150 investors.

    • Addressed to qualified investors.

    Qualified investors. The following are considered "qualified investors":

    • National governments and regional authorities, central banks, international and supranational institutions and similar international organisations.

    • Persons authorised or regulated to operate on financial markets, both Italian and foreign.

    • "Large" companies which can fulfil at least two of the following requirements:

      • aggregate value of the balance sheet of at least EUR20 million;

      • net turnover of at least EUR40 million;

      • own funds of at least EUR2 million.

    • Institutional investors whose main activity is investing in financial instruments, including securitisation companies.

    • Entities that expressly request to an intermediary to be classified as professional customers, provided that specific procedures and at least two of the following requirements are met:

      • execution of significant transactions on the market in question, averaging ten transactions each quarter in the previous four quarters;

      • the value of the customer's financial instrument portfolio is higher than EUR500,000 including cash deposits;

      • the customer works, or has worked, in the financial sector for at least one year in a professional capacity which presumes awareness of the transactions and services envisaged.

    Other exemptions. These include offers:

    • Amounting to less than EUR5 million, calculated over a 12-month period.

    • Involving financial products with a total consideration of at least EUR100,000 per investor for each separate offer.

    • Involving financial products with a denomination per unit of at least EUR100,000.

    • Involving shares issued to replace shares of the same class already issued, where issuing the new shares does not increase the issued capital.

    • Involving securities offered, allotted or to be allotted to existing or former directors or employees or to financial brokers by:

      • an issuer which has its registered office in an EU country, provided that a document is made available containing information about the number and nature of the securities and the reasons for and details of the offer;

      • an issuer which has its registered office in a non-EU country, provided that the issuer has securities admitted to trading on a regulated market;

      • an issuer which has its registered office in a third country with securities admitted to trading on a market of a third country, provided that adequate information and the document indicated above are made available (in a language at least customary in the sphere of international finance), and the European Commission has adopted an equivalence decision regarding the third country market concerned.

    12. What are the main content or disclosure requirements for a prospectus (or other main offering document)? What main categories of information are included?

    The issuer must prepare the prospectus in accordance with Prospectuses Regulation (Article 94, Italian Consolidated Financial Act). The Prospectus Directive sets out the rules for drafting the prospectus.

    The prospectus must contain:

    • A registration document containing information about the issuer.

    • A securities note containing information about the securities being offered.

    • A summary containing the essential characteristics and risks of the issuer and the securities to be offered.

    A typical IPO prospectus includes the following standard content:

    • Risks factors, which describe risks related to the investment highlighting the characteristics of the issuer, its financial instruments and the offer.

    • Information on the issuer, such as a description of its:

      • business activities and organisational structure;

      • capital resources;

      • research and development, patents and licences;

      • administrative, management, supervisory bodies and senior management;

      • related party transactions;

      • major shareholders;

      • assets and liabilities, financial position and profits and losses;

      • material contracts.

    • Audited financial information of the past three financial years and an audit report for each financial year prepared in accordance with the International Accounting Standards (IAS/IFRS). This financial information can also be provided in accordance with another country's generally accepted accounting principles (GAAP), provided certain requirements are met.

    • Information on the securities being offered.

    • Information on the offer and the listing and on directors, key executives, and auditors of the company.

    13. How is the prospectus (or other main offering document) prepared? Who is responsible and/or may be liable for its contents?

    The issuer is responsible for drafting the prospectus, and the responsibility for any potential damage suffered by an investor who relied on information contained in the prospectus falls first of all on the issuer. The issuer's legal and financial advisors, as well as the independent auditors, are also responsible for drafting certain parts of the prospectus.

    The issuer is primarily liable for any loss suffered by an investor who acted in reliance with a prospectus which:

    • Contained any false or misleading information.

    • Omitted any material information.

    Investors can also file a class action against the issuer, the underwriters or both through consumer or investor associations in order to take advantage of the benefits of a public or aggregate judgment.

    The following are also liable for any damage caused to a shareholder who has reasonably relied on the accuracy and completeness of the information contained in the prospectus:

    • The issuer.

    • The guarantor (if any).

    • The intermediary responsible for placement will be liable for false information or omissions that could influence the reasoned decisions of an investor, unless the intermediary proves that all due diligence was adopted pursuant to the previous subsection.

    • Any other entity or person responsible for the contents of the prospectus. This can include legal and financial advisors as well as independent auditors.

    Under Italian criminal law and the Consolidated Financial Act, it is an offence punishable by imprisonment of one to five years for a person to include false information or conceal data or news, with the view to obtain an undue profit for himself or for others, in a way that is likely to mislead the recipients of a prospectus.


    Marketing equity offerings

    14. How are offered equity securities marketed?

    Equity securities are marketed in the following ways:

    • Pre-marketing. A survey of potential investors conducted by the banks and the global co-ordinator.

    • Road shows. Meetings with the financial community held during the book-building process. Normally, both the company's senior manager and the global co-ordinator participate in the road shows.

    • One-to-one meetings. Meetings between the company's management and potential shareholders and investors, arranged by the global co-ordinator.

    • Research report and guidelines. Research analysis on the company's financial and economic status prepared by the global co-ordinator, the lead underwriter or other members of the underwriting syndicate.

    • Advertising and communication. Publicity and advertising campaigns connected with the offer. These must be submitted to Consob.

    15. Outline any potential liability for publishing research reports by participating brokers/dealers and ways used to avoid such liability.

    When performing his duties, the analyst must take into account and verify all available information.

    In particular, he must consider:

    • Data that the issuer has published directly.

    • Data and information that the issuer has made available or has submitted during specific meetings.

    • Data resulting from studies and industry research.

    • Data on the current economic situation and trends of the market and industry.

    • Published information on particular capital transactions, and their issuers in the case of related party transactions.

    • Financial press, databases and information services.

    The offeror, the issuer and the placement agent must ensure that the information in the prospectus is consistent with the information provided to institutional investors when placing the offer. The issuer must send Consob copies of reports, which must be compliant with the guidelines prepared by the global co-ordinator and their legal advisers.

    The authors of reports are both criminally and civilly liable for any breach of these guidelines if the report contains any false or misleading information or omits any relevant information.



    16. Is the bookbuilding procedure used and in what circumstances? How is any related retail offer dealt with? How are orders confirmed?

    The bookbuilding procedure is used for:

    • Carrying out private placements to institutional investors.

    • Determining the price of the shares in a public offer.

    Issuers usually use investment banks with significant retail distribution networks as co-managers or syndicate members to assist with this.

    When the bookbuilding is used to determine the price and quantity of the offer, usually a maximum price is fixed before the bookbuilding. Once the offering period is closed, the final price is established considering the quantity and quality of the orders received and the desired size of the offer.

    The global co-ordinator organises and manages the bookbuilding and collects all purchase and subscription orders of investors in an institutional book, arranged by price, time priority or size. Each order can be expressed in number of shares or equivalent, each one indicating the price limit reported by the originator. This allows the reconstruction of the demand curve that links to individual price levels the different volumes required.


    Underwriting: equity offering

    17. How is the underwriting for an equity offering typically structured? What are the key terms of the underwriting agreement and what is a typical underwriting fee and/or commission?

    In an IPO the underwriting will usually commit to either:

    • Place the offered securities with investors.

    • Place the offered securities with investors, or purchase any that remain unsold.

    The underwriting for an equity offering is generally structured without a firm commitment basis (where the underwriter agrees to purchase all the unsold securities).

    The underwriting agreement generally contains the following key terms:

    • Issuer's (and seller shareholders', if any) representations and warranties regarding:

      • the completeness and accuracy of the information contained in the offering documents;

      • the structure of the company;

      • authorisation for the issue and subscription of the shares.

    • Lock-up provisions that usually specify a lock-up period during which the issuer and the shareholders agree not to sell all, or a portion, of their securities.

    • Closing conditions.

    • Indemnification clauses.

    • Termination clauses which usually provide for the resolution of any significant external event, if this occurs.

    The underwriting fee is usually between 2% and 5% of the value of the offering, depending on the offer size and the risk involved.


    Timetable: equity offerings

    18. What is the timetable for a typical equity offering? Does it differ for an IPO?

    The timetable for an equity offer by a company with securities already listed is normally faster than that for an IPO.

    Below, Y is date of Consob's approval of the publication of the prospectus timetable for an equity offering:

    • Two months before Y:

      • appoint the legal, financial and public relations advisers as well as the global co-ordinator;

      • prepare all the required documentation for the due diligence checklist;

      • start drafting the prospectus with all the parties involved in the equity offering process.

    • Two months before Y, filing of the prospectus with Consob and Borsa Italiana SpA for its approval.

    • Y, Consob approves the prospectus

    • Two weeks after Y, the road show takes place.

    • Three weeks after Y, the public offer is made.

    • Four weeks after Y, Borsa Italiana SpA completes the admission of the issuer for trading and defines the first date of trading.

    Timetable for an IPO:

    • Three months before Y, appoint the:

      • legal advisers;

      • financial advisers;

      • public relations advisers;

      • global co-ordinator.

    • Two to three months before Y, start:

      • legal and business due diligence;

      • listing process.

    • Two months before Y, attend a meeting with Consob and Borsa Italiana SpA and apply for the approval of the prospectus.

    • One month before Y, start pre-marketing activity.

    • Three days before Y, Borsa Italiana SpA admits the shares to listing.

    • Y, Consob approves the prospectus.

    • Two to three weeks after Y:

      • bookbuilding and the roadshow take place;

      • the price of the shares is set;

      • bookbuilding period ends and the public offer takes place;

      • signing of the underwriting agreement.

    • Four weeks after Y, Borsa Italiana SpA admits the issuer to trading.

    In addition to the above timetable, Consob must assess whether the prospectus is appropriate and whether it complies with the Italian Consolidated Financial Act and other relevant regulations. This process usually takes:

    • Ten business days for an equity offering.

    • 20 business days for an IPO.



    19. Are there rules on price stabilisation and market manipulation in connection with an equity offering?

    Stabilisation activities are allowed:

    • In an IPO, for 30 days starting from the first trading day.

    • In secondary equity offerings, from the date of disclosure to the public of the price of the securities to the 30th day after the date of allotment.

    Stabilisation activity must be carried out on regulated markets and must not have a significant effect on the price of the securities traded.

    Before the start of the offer period, the issuer must:

    • Alert the market that:

      • it may undertake stabilisation;

      • there are no guarantees that it will be undertaken;

      • any stabilisation may be stopped.

    • Alert the public that stabilisation transactions are aimed at supporting the market price.

    • Communicate:

      • the beginning and the end of the stabilisation period;

      • the existence and extent of any over-allotment option and any greenshoe option.

    Within one week after the end of the stabilisation period, issuers, offerors, or entities acting on their behalf, must communicate to the public, in an appropriate manner, the following information:

    • Whether or not stabilisation was undertaken.

    • The date on which stabilisation commenced.

    • The date on which stabilisation last occurred.

    • The price range within which the stabilisation was performed (for each of the dates during which stabilisation transactions were carried out).

    In equity securities offers, the stabilisation of the relevant securities must not, under any circumstances, be made at a price higher than the offer price.

    In an offer of securitised convertible debt, the stabilisation of those instruments must not, under any circumstances, be made at a price higher than the market price.


    Tax: equity issues

    20. What are the main tax issues when issuing and listing equity securities?

    The following provides a high-level summary of the main tax issues when issuing and listing equity securities.

    Dividend income

    Dividend income arising from equity securities is generally subject to substitute tax at 26% if it is paid to individuals. Income that is paid to corporate subscribers is considered revenue that forms the taxable base of corporate income tax. Substitute tax on dividend is reduced to zero for investors resident in "white-listed" countries, that is, countries allowing an adequate exchange of information between tax authorities.

    Capital gains

    Capital gains are generally subject to substitute tax at 26% if they are earned by individuals. Income earned that is paid to corporate subscribers is considered revenue that forms the taxable base of corporate income tax. Capital losses are deductible. Capital gains tax rate is reduced to zero for investors resident abroad if bonds are listed and is also equal to zero if investors are resident in “white listed” countries.

    Withholding tax

    Dividends distributed to non-resident investors are subject to a final 26% withholding tax. However, shareholders have the right to obtain a refund of up to 68.75% of the withholding tax for the income tax which they paid on the same item of income in their country.

    For dividends paid to corporate shareholders that are residents of EU countries a special withholding tax rate of 1.375% applies. This rule applies only to profits earned after the 2008 financial year. Tax treaties can reduce the rate of withholding tax

    Stamp duty

    Stamp duty at 0.2% per annum is levied on periodical communications issued by the Italian financial intermediaries to the clients, with regard to the financial instruments lodged with them.

    Tobin tax

    Tobin tax is levied on the transfer of property shares issued by companies resident in Italy. The tax rate is 0,2% of the transaction value, reduced to 0,1% where the sale takes place on listed market.

    Deductibility of costs

    Costs incurred over the issuance and listing process for equity securities are generally tax deductible.


    Continuing obligations

    21. What are the main areas of continuing obligations applicable to listed companies and the legislation that applies?

    The continuing obligations that are applicable to listed companies once the issuer has been listed on a regulated market are as follows:

    • Undertake periodic reporting.

    • Act in accordance with continued qualitative and quantitative listing requirements (including corporate governance).

    • Detect and publish periodic financial and economic data (annual and semi-annual accounts, quarterly reports).

    • Disclose price sensitive information.

    • Disclose significant transactions through a document that relates to corporate operations (such as mergers, demergers, acquisitions and disposals).

    • Carry out any related party transaction under the appropriate designated procedure.

    • Make sure that independent managers and directors are directly involved in related party procedures, ensuring that they are informed of the operations and are involved in the decision-making process.

    • Publish any shareholder agreements that can affect exercise of a shareholder's vote and communicate those to Consob. Any such agreements that have not been published and notified to Consob will be null and void.

    • Disclose to the public any information that the issuer needs to explain under the Borsa Italiana Corporate Governance Code, which operates on the "comply or explain" principle.

    • Maintain an up-to-date list of insiders.

    • Ensure the annual and semi-annual accounts are certified by auditors.

    • Disclose any relevant information about the issuer's remuneration policy.

    • Comply with the rules relating to tender offers.

    22. Do the continuing obligations apply to listed foreign companies and to issuers of depositary receipts?

    The continuing obligations apply to foreign companies if they have shares listed in Italy and if Italy is the first EU country in which an application for listing has been submitted.

    23. What are the penalties for breaching the continuing obligations?

    A company, its directors or any other entity which fails to comply with its continuing obligations can be subject to administrative sanctions and fines. Serious breaches can also lead to criminal sanctions.

    The following penalties can apply to a party which breaches its continuous obligations:

    • Written notice from Borsa Italiana SpA.

    • Fines.

    • Suspension from trading the shares on the market.

    • Administrative sanctions on the issuer, directors or any entity in breach.


    Market abuse and insider dealing

    24. What are the restrictions on market abuse and insider dealing?

    Restrictions on market abuse/insider dealing

    Consob supervises compliance with the regulations on market abuse in Italy. An insider can obtain inside information by participating in the corporate or capital structure of a company.

    Privileged information, also known as price sensitive information, means specific information, the content of which is not public, which concerns financial instruments or issuers of financial instruments, which, if disclosed, would be likely to significantly influence the price. An insider cannot use inside information to obtain an advantage, as this is insider trading, which is a crime.

    A list of insiders must be held by every listed company, and this list must be kept up-to-date.

    Under the Italian Consolidated Financial Act, market manipulation is the behaviour of anyone who spreads false information or engages in simulated transactions or other devices that are likely to produce a significant change to the price of financial instruments. It is a behaviour that usually occurs by disseminating false information in order to generate an upward or downward movement on the market price, and it is prohibited for anyone to engage in market manipulation.

    Penalties for market abuse/insider dealing

    Under Italian criminal law, insider trading is a crime. A person guilty of insider trading can be subject to both:

    • A term of imprisonment between three to eight years.

    • A fine ranging from EUR200,000 to EUR3 million.

    A person guilty of market manipulation can be subject to both:

    • A term of imprisonment between one to six years.

    • A fine ranging from EUR20,000 to EUR5 million.



    25. When can a company be de-listed?


    De-listing can occur in the following ways:

    • A listed company can voluntarily proceed with the de-listing process when:

      • the company is no longer able to meet the listing requirements;

      • the company's shareholders approve a resolution to de-list the company (note that withdrawal rights may apply).

    • A listed company is taken over by, or merges with, an unlisted company.

    • Borsa Italiana SpA can order the de-listing of a financial instrument where there is either a prolonged lack of trading or where it considers that, because of special circumstances, it is not possible to maintain a normal and regular market for that instrument. When deciding whether to revoke a financial instrument, Borsa Italiana SpA takes the following factors in consideration:

      • the average daily value of trades executed on the market and the average number of shares traded and collected over a period of at least 18 months;

      • the frequency of trades recorded in the same period;

      • whether the financial instruments are capable of being distributed to the public, in terms of the value and number of subject holders;

      • whether the issuer is subject to insolvency proceedings;

      • any negative opinion of the auditors, or inability of the external auditors to express an opinion, for the two previous years;

      • the dissolution of the issuer.


    A suspension to trading is an unplanned interruption of the normal process of negotiating a financial instrument.

    A suspension to trading can be:

    • A discretionary suspension, which is declared by the market authorities where there are circumstances that may cause disruption to the orderly conduct of trading, such as the absence of, or uncertainty about, news concerning a given issuer. Borsa Italiana SpA can make a discretionary suspension where there are anomalous trends among market prices or quantities traded, or where there are particular circumstances that do not guarantee the proper functioning of the market.

    • Automatic suspension, which is automatically triggered by a specific event, such as exceeding the specific thresholds concerning a change in the price. Automatic suspensions are also triggered when the concluded contract would exceed the maximum allowed for the price variation (for example, either plus or minus 10% for equities).



    26. Are there any proposals for reform of equity capital markets/exchanges? Are these proposals likely to come into force and, if so, when?

    A recent piece of legislation affecting equity capital markets is Legislative Decree 12 May 2015, No 72. This Decree implements 2013/36/EU on capital requirements (Capital Requirements Directive IV), amends Directive 2002/87/EC and repeals Directives 2006/48/EC and 2006/49/EC, concerning the business of credit institutions and the prudential supervision of credit institutions and investment firms. The Decree contains amendments to the Italian Banking Act and the Italian Consolidated Financial Act, and came partly into force on 27 June 2015.

    Regulation (EU) 596/2014 on market abuse (Market Abuse Regulation) comes into force from 3 July 2016. The Market Abuse Regulation introduces:

    • The extension of :

      • the legislation on market abuse to financial instruments traded on Multilateral Trading Facilities, other organised trading systems and "over-the-counter";

      • the legislation to commodity markets and related derivative markets;

      • the definition of market manipulation to the trading orders placed through electronic means such as algorithmic trading strategies and high frequency.

    • The possibility of carrying out market surveys.

    • A list of:

      • types of conduct considered lawful;

      • market practices that allow the avoidance of the market manipulation prohibitions.

    • The requirement to maintain a register of persons with access to inside information for listed issuers and the persons acting on behalf or on behalf of listed issuers.

    • The following simplified criteria for issuers listed on a "SME growth market" (as defined in Article 33 of Directive 2004/39/EC on markets in financial instruments (MiFID)):

      • simplified disclosure obligations;

      • exemption from the creation of a register of persons with access to inside information provided that the issuer ensures that people who have access to inside information are properly informed of the legal and regulatory obligations that this involves and that the issuer can provide, upon request, to the competent authority a list of persons with access to inside information.

    Directive 2014/57/EU on market abuse (Market Abuse Directive), introduces a list of criminal sanctions for insider dealing and market manipulation.


    Online resources

    Online resources

    Borsa Italiana SpA

    W www.borsaitaliana.it

    Description. The official website of the Italian stock exchange (Borsa Italiana SpA).

    Italian Securities and Exchange Commission (Commissione Nazionale per le Società e la Borsa) (Consob)

    W www.consob.it

    Description. The official website of the Italian Securities and Exchange Commission (Consob).

    Contributor profile

    Lukas Plattner, Partner

    NCTM Studio Legale

    T +3902 725511
    F +3902 72551501
    E l.plattner@nctm.com
    W www.nctm.it

    Professional qualifications. Lawyer, Italy.

    Areas of practice. Equity and debt capital markets; banking and finance; M&A.

    Non-professional qualifications. LLB, Università Cattolica del Sacro Cuore of Milan, 1993; LLM (Economics law), Università Carlo Cattaneo – LIUC of Castellanza, 2003.

    Recent transactions.

    • Recognised leader in the Italian market for assisting SMEs in becoming listed.

    • Recommended by the IFLR 1000 and Who’s Who Legal in corporate and securities law.

    • Experienced in capital markets, public offerings, private placements, and banking and regulatory securities matters.

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