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 multi-jurisdictional guide to capital markets law. For a full list of jurisdictional Q&As visit www.practicallaw.com/capitalmarkets-mjg.

Enrico Giordano and Elena Brannetti, Chiomenti 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

The Italian Stock Exchange (Borsa Italiana SpA) (www.borsaitaliana.it) (ISE) manages the main Italian regulated equity markets, which are:

Mercato Telematico Azionario (MTA). This is the main Italian equity market. MTA is divided into three segments:

  • MTA, which is the ordinary market.

  • MTA-STAR segment (Segmento Titoli con Alti Requisiti), which is the segment for small and mid-cap companies that are subject to higher ongoing admission requirements aligned with the international best practice.

  • MTA International, which is the segment for the trading of shares of non-Italian issuers already listed in other EU regulated markets.

Mercato telematico degli investment vehicles (MIV). This is the market for the trading of shares of investment companies and real estate investment companies. It is divided into four segments:

  • Closed-end funds segment.

  • Investment companies segment.

  • Real estate investment companies segment.

  • Professional segment, which is accessible only to professional investors, and where, among others, special investment vehicles are traded.

The following does not refer to the closed-end funds segment.

In addition to the regulated markets, ISE also manages two multilateral trading facilities:

  • AIM Italia, dedicated to small and medium companies.

  • Mercato Alternativo del Capitale (MAC) which is dedicated to professional investors.

Starting from 1 March 2012, AIM Italia and MAC are combined in a new multilateral trading facility managed by ISE, AIM Italia – Mercato Alternativo del Capitale, dedicated to small- and medium-sized enterprises.

Market activity and deals

At the end of 2011, there were 304 companies listed on ISE's regulated markets, among which:

  • 262 companies listed on the MTA (71 on the STAR segment).

  • 36 companies listed on the MTA International segment.

  • Six companies listed on the MIV.

The aggregate capitalisation of listed companies reached EUR332.3 billion at the year end, corresponding to 20.7% of Italian gross domestic product. Share trading achieved a daily average of EUR2.8 billion and 270,156 contracts. A total of 68.1 million contracts were traded for a total turnover of EUR706.7 billion (as at 1 February 2012, US$1 was about EUR0.76).

Money raised by already listed or newly listed companies during 2011 amounted to EUR13.1 billion, of which approximately EUR0.6 billion was raised through initial public offerings (IPOs) and EUR12.5 billion was raised through 19 share capital increase transactions.

In 2011, two IPOs were completed:

  • Ferragamo: EUR378.9 million, on the MTA.

  • Italy1 Investment: EUR150 million, on the MIV Professional segment.

Due to unfavourable market conditions, in 2011 the IPO of Avio was pulled after filing of the prospectus with the Italian securities' and exchange commission (Commissione Nazionale per le Società e la Borsa) (Consob) and ISE. In addition, a number of IPOs were postponed before filing of the prospectus with Consob and ISE. Furthermore, during the year, three companies were issued the eligibility for listed status (Lima Corporate, Fedrigoni and SEA), which allows such companies to plan their public offering in the following 12 months.

In 2011, 14 companies have been revoked from listing.

According to Consob, issuers and offerors can postpone the offering period, after approval of the prospectus by Consob, provided that:

  • The issuer declares in the prospectus its intention to postpone the offering period in the event of unfavourable market conditions.

  • In any case, the offering period starts within one month from Consob's approval of the prospectus, and the financial information is updated according to applicable laws and regulations.

The biggest share capital increases in 2011 were:

  • Intesa Sanpaolo: EUR4,999.52 million.

  • Banca Monte dei Paschi di Siena: EUR2,151.87 million.

  • Banco Popolare: EUR1,987.68 million.

  • UBI Banca: EUR999.57 million.

  • Banca Popolare di Milano: EUR799.42 million.

As of the end of January 2012, two rights issues were underway.

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

Regulatory bodies

The main regulators of equity markets and exchanges are:

  • Consob, which supervises and regulates the Italian securities market and listed issuers.

  • ISE, which manages, regulates and supervises its own markets.

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

  • The Italian insurance supervising authority (Istituto per la vigilanza sulle assicurazioni private e di interesse collettivo) (ISVAP), which supervises and regulates insurance companies.

Legislative framework

Rules concerning regulated markets and the issue of securities are provided by:

  • The Consolidated Financial Act (Legislative Decree 24 February 1998, N. 58), which sets out the rules applicable to financial intermediaries, regulated and non regulated markets, public offerings, tender offers and listed companies (available at www.consob.it).

  • The Consolidated Banking Act (Legislative Decree of 1 September 1993, N. 385), which sets out the rules applicable to banks and financial intermediaries. It also sets out some provisions regarding the issue of securities (available at www.bancaditalia.it).

  • Consob regulations 16191/2007 (which implements the provisions on markets contained in the Consolidated Financial Act) and 11971/1999 (which implements the provisions on issuers contained in the Consolidated Financial Act) (available at www.consob.it).

  • ISE rules for the functioning of its markets (the Rules of the Markets organised and managed by ISE, which are also implemented by instructions) (available at www.borsaitaliana.it).


Equity offerings

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

Main requirements

To list their shares on ISE's regulated markets, companies must be regularly established and their articles of incorporation and bye-laws must conform with the laws and the regulations to which they are subject. Financial instruments must:

  • Be issued in compliance with applicable rules and regulations.

  • Comply with the laws and regulations to which they are subject.

  • Be freely negotiable.

  • Be suitable for settlement services and for trading in a fair, orderly and efficient manner.

In addition, foreign issuers must, among other requirements, demonstrate that:

  • There are no impediments to their substantial compliance with applicable rules and regulations concerning information to be made available to the public, Consob or ISE.

  • There are no impediments of any kind to the exercise of all the rights attaching to their financial instruments.

Further requirements are provided for issuers of shares:

  • Listed in the STAR segment.

  • Controlling companies established and regulated under the laws of non-EU countries.

  • Subject to direction and co-ordination by another company (as defined by Italian law).

  • Which are financial companies with equity composed exclusively of equity investments.

Minimum size requirements

MTA. For each segment, except where securities of the same class are already listed, the market capitalisation of all securities to be listed by a company must be:

  • Ordinary market: higher than EUR40 million.

  • STAR: lower than EUR1 billion and higher than EUR40 million.

  • MTA International: not applicable.

MIV. Except where securities of the same class are already listed, the market capitalisation of all securities to be listed by a company must be more than EUR40 million for investment companies, real estate investment companies and special investment vehicles.

Trading record and accounts

MTA. Issuers must carry out activity capable of generating revenues directly or through their subsidiaries and in conditions of management autonomy.

Issuers must have published and filed stand-alone or consolidated annual accounts for the last three financial years, of which at least the latest must be accompanied by an auditor's opinion (which cannot be an adverse opinion or contain a disclaimer). Companies resulting from extraordinary corporate actions or whose assets and liabilities underwent material changes in the financial year preceding the application or subsequently must provide pro forma documents, accompanied by the auditor's report.

In addition, issuers must have appointed an auditing firm to audit their annual accounts (except as provided for by the corresponding applicable provisions of foreign law). There are no working capital requirements.

MIV. Issuers must carry out activity in conditions of management autonomy and must establish and pursue an investment policy.

Issuers must have published and filed, in compliance with national law, their stand-alone or consolidated annual accounts for at least one financial year, accompanied by an auditor's opinion (which must not be an adverse opinion or contain a disclaimer). In addition, companies resulting from extraordinary corporate actions, or whose assets and liabilities underwent material changes in the financial year preceding the application or subsequently, must provide certain pro forma documents. There are no working capital requirements.

Shares in public hands

MTA. For admission to listing, the free float of the shares must be:

  • Ordinary market: at least 25%.

  • STAR: at least 35%.

  • MTA International: not applicable.

MIV. For admission to listing, the free float of the shares must be:

  • Investment companies: at least 25%.

  • Real estate investment companies: at least 35%.

  • Special investment vehicles: at least 35%.

4. What are the main requirements for a secondary listing on the main markets/exchanges?

There is no answer content for this Question, as it is a new addition to the template that did not exist at the time of writing.

5. What are the main ways of structuring an IPO?

The main ways of structuring an IPO are:

  • Offer for subscription. An offer to subscribe for newly issued shares, made to the public by the issuer.

  • Offer for sale. An offer to purchase already issued shares, made to the public by one or more selling shareholders.

Companies can be listed without launching an IPO in the following situations:

  • Pure listing. Companies with shares that are already widely held by the public can file a listing application with ISE and Consob without offering shares to the market.

  • Merger and demerger. Where an unlisted company merges with a listed company, the shareholders of the unlisted company receive shares of the listed company in exchange for their shares in the unlisted company. When a listed company merges with another listed company, shareholders of both companies receive shares of the new listed company in exchange for their original shares. A listed company can also demerge into two or more listed companies. When this happens, the shareholders of the original company become shareholders of both of the resulting listed companies.

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

The main ways of structuring a subsequent equity offering are:

Share capital increase. An offer to subscribe for newly issued shares made:

  • By public offer, with pre-emptive subscription rights granted to the existing shareholders.

  • By an offer to institutional investors, excluding pre-emptive subscription rights (in whole or in part).

Secondary offering. An offer to purchase issued shares, made to the public or to institutional investors by one or more selling shareholders.

Subsequent equity offerings are often made by means of subscription of convertible or exchangeable financial instruments.

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

There is no answer content for this Question, as it is a new addition to the template that did not exist at the time of writing.

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?

The main steps by a company applying for a primary listing of its shares in a regulated market (MTA and MIV) are:

  • Preparation of a prospectus and requesting Consob's authorisation for the publication of the prospectus.

  • Adoption of appropriate corporate governance.

  • Applying to ISE for admission to listing.

Except for companies already listed on a regulated market, which have a simplified procedure, the procedure for an overseas company applying for a primary listing is similar to the one for Italian companies. Overseas companies have shares listed on the ISE rather than depositary receipts.


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 (GCs)

GCs are banks selected by the company to act as co-ordinators for the public and institutional offerings, on a global basis. In an equity offering, their role is to:

  • Oversee the equity offering process.

  • Co-ordinate the underwriting syndicates and any specialists, such as the independent auditors and lawyers.

  • Advise the company on, among other things, the strategy of the offer and timing.

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

  • Estimate demand for the company's shares.

In addition, in the IPO process, GCs also advise the issuer on business preparation, corporate governance and compliance with exchange listing requirements.

The GCs execute the Italian underwriting agreement and an institutional underwriting agreement with the issuer and, if any, the selling shareholders.


Both for equity offerings and for an IPO, underwriters are banks and financial institutions, participating in an underwriting syndicate, that undertake to purchase or subscribe for a given amount of the shares offered. Underwriters also usually market the equity offering to institutions and carry out research on the issuer through their independent research departments (see Question 15).


For an IPO, the company must appoint a financial intermediary to act as sponsor and help the company through the pre- and post-listing stages. In most cases, the sponsor also acts as GC of the IPO.

During the listing process, the sponsor is responsible for informing the ISE that:

  • It has submitted to ISE all the data and facts regarding the issuer that have come to its knowledge and that ISE should take into consideration in order to admit the company to listing.

  • The company's corporate bodies are aware of the company's and their own continuing obligations after flotation.

  • On the basis of conformity checks carried out by an auditing firm, there is no evidence that the company has failed to adopt sufficient internal controls and financial planning procedures.

  • The company's financial projections are based on well-founded assumptions.

For at least a year after the listing, the sponsor must:

  • Publish two research reports a year about the company.

  • Organise a meeting with the national and international financial community at least twice a year.

The sponsor executes with the issuer the sponsor agreement, and helps the issuer in drafting business documents such as the business plan, the quotation management admission test for ISE and the memorandum on internal control systems.


A company must also appoint a specialist before being admitted to trading in certain markets. The specialist is an approved intermediary who is normally responsible for:

  • Supporting the liquidity of securities traded in the market.

  • Producing at least two research reports regarding the issuer every year.

  • Organising and attending at least two meetings a year of the company's management and professional investors.


For an equity offering, the lawyers' role is to:

  • Advise and provide guidance to the company on the legal aspects of the offer, including:

    • the legal structuring and timing of the offering;

    • compliance with securities and corporate laws. The lawyers assist the issuer in drafting corporate governance documents, such as the certificate of incorporation, the amended bye-laws and the issuer's and selling shareholders' corporate resolutions;

    • obtaining governmental approvals.

  • Assist in co-ordinating the due diligence process and draft the prospectus or offering circular. The prospectus must be prepared in accordance with Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading (Prospectus Directive).

  • Advise the underwriters with regard to legal aspects of the offer, including compliance with securities' laws and regulations. The underwriters' lawyers also:

    • draft and negotiate the underwriting agreement;

    • participate in the due diligence process;

    • participate in the drafting and review of the prospectus (or offering circular) to ascertain on behalf of the underwriter that the documents are not misleading.

  • Prepare memoranda on the publicity, draft research report guidelines and issue negative assurance opinions.

In addition, in an IPO the lawyers:

  • Advise on the restructuring of the company and its corporate governance.

  • Prepare the securities exchange listing application.

  • Advise the selling shareholder (if any) on legal aspects of the offer, including compliance with securities' laws and regulations, lock-up agreements, shareholders' agreements and the extent of its rights under any existing contractual relationships with the issuer.

  • Prepare memoranda on the IPO process.

Independent auditor

During the IPO process, companies must appoint an independent auditor. Typical documents prepared by the independent auditor include:

  • A report on the annual accounts on a stand-alone and consolidated basis for the previous financial year and, where existing, the two preceding years.

  • A report on the six months' interim balance sheet and income statement of the issuer on a stand-alone and consolidated basis, compared with the corresponding information from the previous financial year.

  • A short form report on the quarterly accounts.

  • An opinion on the reasonableness of the basic assumptions made, the correct application of the methods used and the appropriateness of the accounting policies adopted in preparing the pro forma data.

  • A report on the issuer's financial reporting procedures.

  • A report on the procedures followed by the issuer in preparing its business plan.

  • A report on the estimates and forecasts included in the prospectus.

  • An opinion concerning the report on corporate governance and ownership structures.

  • Various comfort letters addressed to the sponsor and, in certain cases, to the underwriters.

Independent auditors of listed companies must verify that:

  • During the financial year, the company's accounts were properly maintained and its transactions were correctly reported in its accounting records.

  • The company's annual and consolidated accounts correspond to the results of the accounting records and audit performed by the independent auditors, and comply with applicable statutory and regulatory provisions.

Public relations consultants

Both for equity offerings and for IPOs, public relations consultants create and develop a communication strategy to obtain positive exposure for the company through, for example, press releases.


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?

A prospectus is required when a company does, among other things, any of the following:

  • Applies for an initial listing of securities.

  • Offers securities pre-emptively to shareholders, if the company has listed or widely distributed shares or convertible bonds.

  • Offers new securities to the public in a secondary offer.

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

A prospectus prepared for an IPO can only be published after Consob has approved it and after ISE has decided to admit the securities for listing (see Question 18).

Foreign issuers' shares can be admitted to MTA International without publishing a prospectus, provided:

  • The shares have already been traded on another European regulated market for more than 18 months.

  • The shares have not been the subject of a de-listing decision in the 12 months preceding the application to or by ISE.

  • The issuer is subject to disclosure obligations 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, among others, offers:

  • Addressed to fewer than 150 investors.

  • Addressed to qualified investors.

Under Italian laws and regulations, qualified investors are:

  • 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; that is, companies which show at the stand-alone level 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 are met 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 include offers:

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

  • Involving financial products with a total consideration of at least EUR50,000 per investor for each separate offer (EUR100,000 from 1 July 2012).

  • Involving financial products with a denomination per unit of at least EUR50,000 (EUR100,000 from 1 July 2012).

  • 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 state, 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 EU 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?

A prospectus for offering and/or admission to listing on regulated markets must contain the information required by Regulation (EC) 809/2004 implementing the Prospectus Directive as regards prospectuses and dissemination of advertisements (Prospectuses Regulation). It must contain all the information necessary for prospective investors to make an informed assessment of the issuer and securities offered (Article 94, Legislative Decree 58 of 24 February 1998). The prospectus can be drawn as a single document or separate documents, which can be filed and approved separately. A prospectus composed of separate documents consists of:

  • 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 securities to be offered.

The required contents of a prospectus vary according to the nature of the issuer. type of security to be listed and characteristics of the offer. However, it must include:

  • Risk factors, which outline the information necessary for assessing investment risks.

  • A summary highlighting the risks and essential characteristics associated with the issuer, its financial instruments and the offer.

  • Information relating to 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;

    • major shareholders;

    • related party transactions;

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

    • material contracts.

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

  • Information relating to the securities being offered.

  • Information concerning the offer and listing and the people involved in it.

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

The prospectus must be drafted by the issuer. To prepare the prospectus and verify the information contained in it, drafting sessions are held and attended by, among others:

  • The issuer's and selling shareholders' officers and legal advisers.

  • Managers and employees.

  • Independent auditors.

  • The issuer's financial advisers.

The issuer, its statutory auditors, the sponsor and the lead manager must state in the prospectus that the part of the prospectus that they are responsible for is, to the best of their knowledge and having taken all reasonable care, true and with no material omission.

Unless they are able to demonstrate that they took every precaution to ensure that the information in question was true and that there were no material omissions, the following are liable for damages sustained by an investor who has reasonably relied on the truthfulness and completeness of the information contained in the prospectus:

  • The issuer.

  • The offeror.

  • The guarantor (if any).

  • Any person responsible for contents of the prospectus.

The intermediary responsible for the placement is liable for false information or omissions that could influence the reasoned decisions of an investor.

Investors can file class actions against the company or its underwriters through consumers or investors associations. Under criminal law, there is an offence of falsehood in a prospectus, punishable with between one and five years' imprisonment.


Marketing equity offerings

14. How are offered equity securities marketed?

The methods of marketing an equity offering include:

  • Pre-marketing. Sales departments of the lead investment banks conduct a survey of potential investors to assess interest and price thresholds.

  • Road shows. During the bookbuilding process, the company's senior management and the GCs conduct a series of meetings with the financial community (see Question 16).

  • One-on-one meetings. The GCs and the lead managers usually arrange meetings with potential and key investors to generate demand and give investors the opportunity to meet with management.

  • Advertising and other publicity. Any advertising or other publicity connected with an offer must be submitted to Consob simultaneously to its release or publication.

  • Research reports on the issuer. Research analysts connected to the issuer's lead underwriter or other members of the underwriting syndicate usually publish an independent research report on the issuer (see Question 15).

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

The preparation and publication of research reports is highly regulated. The offeror, issuer and placement agent must ensure that information contained in the prospectus is consistent with the information provided during the public offer and the placement with institutional investors, including information derived from research reports. Copies of reports must be sent to Consob.

Research reports must also comply with the guidelines prepared by the GCs and their lawyers, in accordance with Consob's regulations. These guidelines usually state that reports must:

  • Contain certain disclaimers.

  • Be subject to a black-out period during which reports are neither published nor distributed.

  • Have a limited distribution (for instance, distributed only to qualified investors in Italy and not to distribution channels).

  • Be compiled without consulting the issuer.

  • Be drafted while maintaining Chinese walls between the analyst and advisory teams working on the offer.

  • Specify the nature and extent of any interest in the issuer's securities or transactions.

  • Avoid investment recommendations to buy.

  • Avoid information provided by the issuer that is not in the prospectus.

The authors of the report are civilly and criminally liable for any breach of these guidelines if the report contains 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?

Bookbuilding is used in private placements to institutional investors and can also be used for determining the price and quantity of securities in a public offer.

Although it is not common practice, bookbuilding has been used in the context of pan-European retail offers to determine the price and quantity of the offers. When it is used:

  • The maximum share price is set before the launch of the retail offer and a notice is published in at least one national newspaper.

  • Retail investors apply on an application form issued with the prospectus and are asked to bid for a minimum number of shares and indicate the share price at which they are prepared to invest.

  • When the offer period is closed, the final price is established taking into account, among other things, the quantity and quality of orders received and the desired size of the offer. Only retail offers at or above the final price are accepted.

  • Retail investors can revoke their application or modify the number or price of the shares they want to buy until the offer period is closed. Payment is due within a specific time period on acceptance of the offer.

Where bookbuilding is not used in the retail offer:

  • The maximum share price is set before the launch of the retail offer period and a notice is published in at least one national newspaper.

  • When the offer period is closed, the final price is established taking into account, among other things, the quantity and quality of orders received from institutional investors and the quantity of orders received from retail investors.

  • A notice of the final price is published in at least one national newspaper.

  • Retail investors agree to purchase or subscribe for a certain number of shares at the maximum share price by completing an application form attached to the prospectus.

  • Once submitted, retail applications are binding (if not revocable under applicable laws, for example a supplement to the prospectus).


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?

The underwriting for an equity offering is generally structured on a firm commitment basis, where the underwriter agrees to purchase all unsold shares.

A public offering underwriting agreement, executed in connection with the retail offer in Italy, is signed by the issuer, the selling shareholders (if any) and the lead manager of the public offer before the offer period starts. It contains the maximum share price for the retail offer. An institutional underwriting agreement, executed in connection with the offer to institutional investors, is signed by the issuer, the selling shareholders (if any) and the GC at the end of the offer period. It contains the final share price of the offer.

The underwriting agreements generally contain:

  • The issuer's and the selling shareholders' (if any) representations and warranties regarding, among other things, the accuracy and completeness of the information contained in the offering documents, organisational structure of the company, and authorisation for the issue and subscription of the shares offered.

  • The terms for the sale and delivery of the shares offered.

  • The underwriting commitment.

  • Lock-up provisions.

  • Termination clauses.

  • Indemnification clauses.

The underwriting fee is usually between 2% and 5%, depending on the offer size.


Timetable: equity offerings

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

Set out below are approximate timetables for an equity offering by a company with already listed securities and an IPO (where A is the date of Consob's approval for publication of the prospectus).

Equity offering: company with already listed securities

  • A minus 2 months. The appointment of GCs, legal advisers, financial and public relations consultants.

  • A minus 2 months. Legal and business due diligence starts.

  • A minus 2 months. All parties involved start drafting the prospectus.

  • A minus 6 weeks. The issuer attends a meeting with Consob and ISE. The issuer must inform ISE of the equity offering but no application is required.

  • A minus 6 weeks. The issuer applies to Consob for approval of the prospectus.

  • A. Consob approves the prospectus.

  • A plus 2 weeks. Road shows take place.

  • A plus 3 weeks. The public offer is made. The offer price is usually determined before the beginning of the offer.

  • A plus 4 weeks. ISE admits the shares for trading (closing).


  • A minus 3 months. The appointment of GCs, legal advisers, financial and public relations consultants.

  • A minus 9 weeks. Legal and business due diligence starts.

  • A minus 9 weeks. All parties involved start drafting the prospectus.

  • A minus 8 weeks. The issuer attends a meeting with Consob and ISE.

  • A minus 2 months. The issuer applies to Consob for approval of the prospectus and to ISE for the listing and offer of the shares.

  • A minus 1 month. Pre-marketing is carried out and the relevant brokers publish their research.

  • A minus 3 days. ISE admits the shares to listing.

  • A. Consob approves the prospectus.

  • A plus 2 weeks. Bookbuilding and road shows take place and the issuer or selling shareholder (sometimes in consultation or agreement with the GCs) then determine the maximum offer price.

  • A plus 2/3 weeks. The public offer is made and the bookbuilding period ends.

  • A plus 3 weeks. The issuer and underwriters price the offer and sign the underwriting agreement. After pricing, the underwriters can exercise the over-allotment option.

  • A plus 4 weeks. ISE admits the shares for trading (closing) and the 30-day stabilisation period and secondary market start.

Consob's review period of the prospectus is:

  • For equity offerings, up to ten business days starting from the date Consob receives the full set of documentation required by applicable laws (and, in any case, no more than 40 business days from the date in which the request for approval of the prospectus is completed).

  • For IPOs, up to 20 business days starting from the date Consob receives the full set of documentation required by applicable laws (and, in any case, no more than 70 business days from the date in which the request for approval of the prospectus is completed).

Issuers can draw up the prospectus as separate documents (a registration document, a securities note and a summary note). In this case, issuers can divide the admission procedure into two stages: filing of the registration document and filing of the securities note and summary note (see Question 12).



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

The prospectus must contain the general framework for the stabilisation activity and identify the stabilisation manager.

The offeror, issuer and the person placing the shares (as well as anyone controlling, controlled by or related to them):

  • Can carry out stabilisation activities for 30 days starting from the first trading day in an IPO (or 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.

  • Must notify the details of all stabilisation transactions to Consob within seven trading days from the date of execution of the transactions.

  • Must disclose to the public the aggregate data resulting from the stabilisation activity within one week from the end of the stabilisation period.

Anyone who disseminates false information which gives, or is likely to give, false or misleading signals, sets up sham transactions or employs other devices which are likely to produce an alteration in the price of financial instruments admitted to trading is liable to imprisonment and criminal sanctions as well as administrative pecuniary sanctions.


Tax: equity issues

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

The main tax issues that arise when issuing and listing equity securities relate to:

  • Value added tax (VAT). A case-by-case analysis is generally required to assess the correct VAT treatment of the various transactions executed, as well as of the fees paid by or to the parties involved.

  • Income taxes. The tax treatment of capital gains derived by the shareholders can impact on the offer for sale.

Specific issues can arise where an Italian company is listed in a non-Italian market (for example, the mechanism for applying withholding taxes on dividend distributions).


Continuing obligations

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

Listed companies' obligations include (Consob regulations and ISE's listing rules):

  • Disclosing periodic financial information. The issuer must publish annual and semi-annual accounts, and quarterly reports.

  • Disclosing price sensitive information. The issuer must submit a press release concerning inside information to at least two news agencies, Consob and ISE, and post it on the issuer's website.

  • Disclosing significant transactions. The issuer must prepare and make available to the public an information document regarding corporate actions (including mergers, demergers and significant acquisitions and disposals).

  • Related party transactions procedures. The issuer must adopt internal procedures governing related parties transactions and disclose information concerning them. Independent directors must be involved in the approval process for relevant related parties transactions.

  • Notifying significant shareholdings and changes to them. The issuer must notify Consob and the relevant company of certain changes in significant shareholdings. Voting rights attached to shares which have not been notified cannot be exercised.

  • Publishing and notifying Consob of shareholders' agreements, that have as their purpose or effect the exercise of voting rights in companies with listed shares or companies which control them. If the disclosure obligations are not complied with, the agreements are null and void. In addition, voting rights attached to the shares cannot be exercised.

  • Compliance with internal dealing rules governing transactions in the company's shares by persons with managerial responsibilities employed by the issuer, and any persons closely associated with them.

  • Disclosing information to the public in relation to the adoption of, and compliance with, the ISE Code on Corporate Governance (Codice di Autodisciplina delle Società Quotate) (comply or explain principle).

  • Drawing up, maintaining and updating an insiders list.

  • Disclosing information on the company's remuneration policy.

  • Certification of annual and semi-annual accounts and internal control systems by the managing director and the chief financial officer.

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

The continuing obligations apply to Italian companies with shares listed on regulated markets in Italy or other EU countries, and to foreign companies with shares listed in Italy (if Italy is the first EU country in which an application for listing has been submitted). Consob holds consultations with foreign companies before flotation and sets out any applicable continuing obligations.

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

Consob and ISE oversee compliance with the continuing obligations for listed companies. Any breach can lead to:

  • ISE written censure.

  • ISE fines, between EUR5,000 and EUR100,000.

  • ISE suspending trading of the company's shares or cancelling its listing, unless Consob opposes the decision.

  • Administrative sanctions on the company, its directors or any other entity failing to comply with these obligations. Fines range between EUR5,000 and EUR2.5 million, depending on the violation committed.

  • Criminal sanctions for serious breaches.

In the event of a public offering without previous communication to Consob and publication of a prospectus, the offeror is subject to an administrative fine between one quarter and two times the total value of the offer. If the offer value is not determined, an administrative fine between EUR100,000 and EUR2 million applies.

In addition, violation of the rules on public offers (different from those above) are sanctioned with an administrative fine between EUR5,000 and EUR500,000.


Market abuse and insider dealing

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

There is no answer content for this Question, as it is a new addition to the template that did not exist at the time of writing.



25. When can a company be de-listed?

Under applicable laws and regulations, the de-listing of a listed company can be pursued through, among others:

  • Merger by incorporation of a listed company into an unlisted company.

  • Takeover bids.

  • Resolution of the shareholders' meeting.

  • For companies listed on other regulated markets in Italy or in another EU member state, with a de-listing request to ISE.

Further, ISE can revoke the listing of financial instruments if there is a prolonged lack of trading or where it is not possible to maintain a regular market for the instruments.

In 2011, 12 companies de-listed their financial instruments from ISE regulated markets:

  • Eight companies de-listed due to takeover bids.

  • Four companies de-listed due to bankruptcy.



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

In December 2011, the Italian Parliament empowered the government to adopt laws implementing Directive 2010/73/EU, amending Directive 2003/71/EC (Prospectus Directive) and Directive 2004/109/EC (Transparency Directive). Implementation of Directive 2010/73/EU is currently underway, and should be completed in July 2012. Consob has already implemented some provisions of the Directive (including, for example, the definition of qualified investor and some exemptions from the requirement of a prospectus).

The Ministry of Economy and Finance has published a proposal aimed at amending the Decree which implemented, in 2010, Directive 2007/36/EC, on the exercise of certain rights of shareholders in listed companies (Shareholders' Rights Directive).

Consob has published, among others:

  • A proposal aimed at introducing new disclosure obligations for the offering and listing prospectuses of financial products other than equities. In the proposal, Consob has recommended guidelines aimed at representing the financial instruments' risk and return spectrum, and the related costs.

  • A proposal concerning fund raising by banks through issuance of bonds offered to retail investors, which defines the terms of plain bonds issued by banks, in order to provide for a simplified prospectus regime .

  • A proposal aimed at implementing Directive 2009/65/EC on undertakings for collective investment in transferable securities (UCITS) (UCITS IV Directive).

Other regulatory changes related to, among others, public tender offers, transparency on majority interests and shareholders' agreement, small and mid-cap companies' corporate governance and continuing obligations are going to be approved by Consob.

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