The Covid-19 emergency leads to a new Decree strengthening foreign investment control screenings in Italy

The Italian Golden Powers Regulation governing foreign investments in Italy (“GPR”) has recently faced significant changes. Law Decree No. 23 of 8 April 2020 (“Decree”), adopted by the Italian Government, has in fact extended the scope of application of existing investment screening tools, in order to cover new sectors and protect a higher number of strategic companies from potentially harmful foreign takeovers.


The GPR was introduced in 2012 and originally only applied to a limited number of sectors, i.e. defence, national security, energy, transport and communications. Over the years, the scope of application of the GPR was extended to additional sectors including, in 2019, 5G technologies and the sectors outlined in Art. 4(1) letters a) and b) of the EU Regulation No. 452/2019.

The Covid-19 emergency and the recent crackdown

The spread of the Covid-19 pandemic in Italy has prompted the Italian Government to extend the GPR to several further sectors and introduce more wide-ranging screening mechanisms for foreign investment, which apply also to EU non-Italian investors.

In particular, the Decree extends the GPR to the following sectors:

  1. finance;
  2. credit;
  3. insurance;
  4. all business areas listed in article 4(1) of the EU Regulation No. 452/2019, including those which had previously not been covered by the GPR, i.e.:
  • supply of critical inputs, including energy or raw materials, as well as food security;
  • access to sensitive information, including personal data, or the ability to control such information;
  • freedom and pluralism of the media.

In addition, with reference to all such sectors, and specifically for the purposes of dealing with the Covid-19 emergency, the Decree extends the notification obligation to:

  • non-Italian investors (including EU investors) acquiring control of companies active in the above-mentioned sectors (“Relevant Companies”);
  • all acquisitions by non-EU investors of 10% of voting rights or of corporate capital of a Relevant Company (taking into account shares or quotas already directly or indirectly owned), provided that the value of the investment is equal to or greater than 1 million euros. In addition, acquisitions which result in the thresholds of 15%, 20%, 25% and 50% being exceeded shall also be notified; and
  • the adoption by any Relevant Company of any resolution, act or transaction, entailing a modification in the ownership, control, availability, use or destination, of their strategic assets.

Finally, the Decree allows the Italian Government to open the procedure ex officio in case of missed filing.

The Decree is immediately effective but needs to be converted into law (with possible amendments) no later than 8 June 2020, or the relevant provisions will cease to be in force.

The impact of the new provisions

The Decree entails a significant extension of the scope of application of the GPR, both in terms of the sectors involved and with regard to the individual/entities to which the notification obligation will apply. The Decree will result in a larger number of transactions being notified, including as a result of the serious consequences for missed filings, which could lead to fines of up to twice the transaction value (and - as a minimum - of 1% of the aggregate turnover of the undertakings involved), as well as entail the possible nullity of the transaction. 

The Decree is already in force and effective, including in relation to the new notification obligations. However, the envisaged implementing regulations - detailing what assets will be considered as strategic - are yet to be provided for most of the above-mentioned sectors (with the exception of the energy, transport and communication sectors, for which the strategic assets have already been listed). We expect that the lack of clarity in this respect will give rise to complex interpretative issues and grey areas.

These new provisions provide further evidence of the increasing focus of the Italian Government in monitoring transactions and investments in strategic sectors, which in turn is in line with the paradigm shift in the importance and frequency of foreign investment reviews in a number of jurisdictions across the globe, particularly following the spread of the Covid-19 pandemic.

In such a fluid context, with very recent and still untested rules, investors need to keep a close eye on compliance with the GPR.