• Consultation Paper on Consob Regulation of Issuers and Regulation of Markets
  • April 24, 2012
  • Law Firm: Norton Rose Canada LLP - Montreal Office
  • In the course of 2011, following the financial crisis, the Italian regulator, Consob, started and directed a process to study and revise certain regulations in order to revise provisions which would favour access to the market by companies and investors. As a result, the first set of amendments which were aimed at reducing the administrative and economic burdens on the market (Deliberation no 18079, January 2012) were approved earlier this year. In late 2011, Consob conducted further work with a view to amending certain provisions in connection to issuers and the market for the purposes of: (i) maintaining an adequate level of national regulation when compared to European regulation; (ii) simplifying the requirements in connection with the status of a “company listed on a regulated market” in order to reduce procedural costs, and to maintain an efficient level of control of the market in order to protect the rights of the investors. Following this work Consob published, on 22 March 2012, a consultation paper proposing further amendments to the Consob Regulations of the Issuers (IR) and to the Consob Regulation on the Markets (MR). The deadline for comments on the consultation paper is 23 April 2012.

    The main amendments proposed are, inter alia, the following.

    Amendment of the definition criteria for the Issuers of financial instruments widely distributed among the public

    Increased threshold (from 200 to 500) in the number of shareholders and bondholders for the applicability of the regime of the so called “Issuers of financial instruments widely distributed among the public”, enhancing the effectiveness of the diffusion of the financial instruments amongst the public. Further, with respect to companies issuing bond securities, it is required that such issue has a nominal value equal to or above Euro 5 million.

    Therefore the proposed definition criteria is intended to streamline and reduce the regulatory regime applicable to the current number of companies that will no longer fall into the definition.

    Public offerings

    Reduction to Euro 100,000 (from Euro 250,000) of the minimum subscription for the application of the exemption from the publication of a prospectus in public offers involving: a) open-ended collective investment undertakings; and b) financial products issued by insurance companies. An identical reduction has also been proposed for the exemption to launch a takeover bid or tender offer, by the issuer, aiming to acquire or offer units of investment schemes or financial products issued by insurance companies. The proposed changes will serve a double purpose: (i) align the IR with the Prospectus Directive as amended; and (ii) extend the application of the regime on tender and exchange offers also to investment schemes and offers of financial products issued by insurance companies.

    Moreover, in order to deal with the issue of so called “splitting”, the consultation paper proposes to extend an extension of the publication exemption of an offering document, to the event offor exchange offers of securities with: (i) a value of no less then Euro 50,000 000 and; (ii) where the bondholders, who did not reach the amount of bond required for the exchange, are provided with a money consideration [sorry but I don't follow - can we please re-word?].

    Shareholders’ rights

    In light of the current reduction in capitalization and market volatility, the consultation paper amends the criteria for the calculation of the percentage requested for the submission of the lists of candidates for appointment to the board of directors: (a) variation of the capitalization parameter to 1 billion Euros; and (b) subsequent variation of the percentage for the list’s submission: 1 per cent for the companies whose capitalization is between 1 billion and 15 billion, and 2.5 per cent for companies whose capitalization is less than Euro1 billion, with no variation for the other thresholds of 1.5 per cent and 2 per cent.

    Moreover, in order to guarantee greater fairness amongst shareholders and to encourage IPOs, companies intending to go public may adopt as reference criteria for the submission of lists, and up until the second renewal term of the managing boards, a percentage of share capital possession ownership equal to 2.5% share capital possession [is possession the right word?] with no regards to the capitalization.

    Information duties

    To achieve maximum harmonization on obligations concerning ownership structure, so as to lighten regulatory requirements on investors the consultation paper proposes a simplification of the disclosure procedure of significant holdings as follows:

    • removal of the communication duties on the significant holding as per article 117 IR, which are additional to the ones pursuant to the Transparency Directive (35, 40, 45, 75 per cent)

    • extension of the application of the significant holdings regulation to all parties (EU and non-EU) which perform asset management activities, with the extension of the exemption from the communication of the significant holdings between 2 per cent and 5 per cent in order to allow the application to non harmonized close ended collective investment undertakings

    • streamlining of the disclosure obligations of fiduciary companies, to the sole circumstance of the trustees exercising discretionally the right of vote on the registered

    • new exemption for the temporary acquisition of shares below the threshold of 5 per cent by qualified investors.

    In light of the above amendments, it is clear that the intention of the consultation paper is the simplification and harmonization of procedures in order to make entry to the market easier and more affordable.