Amendments to the Regulation of Takeover Bids – Passivity Rule Once Again in Force (with Opt-out Mechanism)

On September 18, 2009, the Italian Council of Ministers adopted a legislative decree (the “Decree”) amending the existing regulation of public tender or exchange offers (“Takeover Bids”) regarding voting securities issued by Italian listed companies. The new provisions mainly concern the “passivity rule” (i.e., the principle according to which the target’s managing body should remain neutral in the context of a Takeover Bid), the definition of “acting in concert,” and the powers of the Italian Commission for Corporations and the Stock Exchange (“Consob”) with respect to offers concerning bonds and financial products other than voting securities. Takeover Bids are primarily governed by the legislative decree dated February 24, 1998, no. 58 (the “Italian Financial Act”), which was modified in 2007 by the implementation of the European Directive 2004/25/CE (the “Directive on Takeover Bids”), and was further amended by the decree-law dated November 29, 2008, no. 185, adopted to deal with the recent financial crisis. This memorandum will briefly illustrate how the Decree amends the existing regulation of Takeover Bids.