Articles

19/08/2020

Capital Markets

Borsa Italiana: new rules for AIM Italia issuers

On 6 July 2020 Borsa Italiana S.p.A. (“Borsa Italiana”), by means of Notice No. 17857 (“Notice”) informed the market of the introduction of some important amendments to the AIM Italia Issuers’ Regulation and to the AIM Italia Rules for Nominated Advisers, which will enter into force mainly on 20 July and 16 September 2020 [1].

Below are the main changes introduced with regard to AIM Italia issuers, which are aimed at consolidating some practices, guiding others and introducing the changes prompted by the evolution of the market, with a view to its consolidation and development.

1. Strengthening of the Panel role

A first intervention is aimed at strengthening the role of the Panel whose rulings, with reference to issues related to public takeover bids of financial instruments traded on AIM Italia, will have binding effects on shareholders (see Article 6-bis of the AIM Italia Issuers’ Regulation).

The Panel, maintaining its mediation role with regard to possible disputes that may arise among Borsa Italiana, issuers and operators in relation to breaches of the AIM Italia Issuers’ Regulations, shall assume, with regard to issues relating to public takeover bids, a decision-making role in negotiations similar to that played by an arbitrator pursuant to Article 1349 of the Italian Civil Code.

In this context, it has been provided that the Panel, pursuant to Article 1349 of the Italian Civil Code, shall make any appropriate or necessary rulings for the proper conduct of the bid, including those relating to the determination of the offer price [2]. In such a case, the rulings shall be at the Panel’s discretion and may be challenged before the ordinary court only if it is manifestly unfair or erroneous.

The Panel shall rule, as indicated by Borsa Italiana in a recent seminar, only with regard to the provisions of Articles 106 and 109 of the TUF, hence, should it be necessary to request the intervention of a third party (e.g. for the determination of the offer price pursuant to Article 108 of the TUF, if incorporated by reference in the by-laws), the Panel cannot be requested to make such rulings. Therefore, it will not be necessary to amend the mechanisms currently provided for in the by-laws of certain AIM Italia issuers.

It must be highlighted that, in the same seminar, Borsa Italiana confirmed the inapplicability of the provisions on withdrawal with respect to the amendments required of AIM Italia issuers with reference to both the new powers of the Panel and the provisions on exclusion from trading (see paragraph 2 below).

In the light of the foregoing, AIM Italia issuers are required to comply with the new provisions by 30 June 2021, amending their by-laws in order to implement the new regulations of the Panel, providing, in particular, that the Panel’s rulings shall have binding effect.

Companies filing an application for admission before 16 September 2020, considering that the timing and progress of the procedure may be at an advanced stage, are allowed to make the necessary adjustment to comply with the new provisions by 30 June 2021.

2. Delisting

Borsa Italiana has also deemed it appropriate to incorporate in the regulatory framework, and, in particular, in the Guidelines, the content of Borsa Italiana Notice No. 5958 of 25 March 2019 regarding the scope of application of Article 41 of the AIM Italia Issuers’ Regulation, concerning the conditions for delisting from AIM Italia market [3] with effect from 20 July 2020.

In order to make the delisting conditions actually enforceable against the parties concerned, Schedule Six of the AIM Italia Issuers’ Regulations outlines a model by-laws provision on delisting. In particular, the by-law clause shall be formulated as follows: «The Company requesting to Borsa Italiana the delisting of its AIM Italia financial instruments must communicate its delisting intentions also to the Nominated Adviser and must separately inform Borsa Italiana of the preferred date for the delisting at least twenty trading days prior to that date. Without prejudice to the exceptions provided for in the AIM Italia Regulations, the request must be approved by the shareholders’ meeting of the AIM Italia Issuer with a majority of 90% of the participants. Said voting quorum shall apply to any AIM Italia Issuer’s resolution that may result, even indirectly, in the exclusion from trading of AIM Italia financial instruments, as well as to any resolution amending this provision of the by-laws».

On this point, it should be noted that it is possible to provide that the aforementioned clause shall not apply in case the AIM Italia Issuer applies for admission to trading on a regulated market or another multilateral trading facility of the European Union [4].

Therefore, AIM Italia issuers will have to adapt the company’s by-laws to the new provisions referred to above within the same deadline of 30 June 2021, transposing the amendments made to Article 41 and Schedule Six of the AIM Issuers’ Regulations.

For new admissions, said provisions shall apply for companies applying for admission from 16 September 2020. Companies filing an application for admission before 16 September 2020, considering that the timing and progress of the procedure may be at an advanced stage, are allowed to make the necessary adjustment to comply with the new provisions by 30 June 2021.

3. Transparency and corporate governance measures

3.1 Independent director

First of all, companies will be required to appoint and maintain at least one independent director who meets the independence requirements established for statutory auditors by Article 148, paragraph 3 of Legislative Decree 58/1998 (“TUF”) (similar to the definition applicable to companies listed on regulated markets pursuant to Article 147-ter, paragraph 4 of the TUF) who shall be chosen by shareholders from among candidates who have been previously selected or positively evaluated by the Nominated Advisers (“Nomad”).

In this regard, it should be noted that with reference to financial year ended 31 December 2019, 96% of the companies admitted to negotiations on AIM Italia have at least one independent director in their board of directors [5].

AIM Italia issuers may refer to a different definition of independent director included in existing corporate governance codes for joint stock companies that provide for independence requirements at least equivalent to those of Article 148, paragraph 3, of the TUF, regardless of whether or not the issuer has adopted said code.

On the occasion of the first renewal of the board of directors, after 31 December 2020, AIM Italia issuers will have to include on the board of directors an independent director, unless already present.

Therefore, AIM Italia issuers will also be required to amend, if necessary, the by-laws in order to provide for the obligation that at least one independent director is present on the board of directors [6]. In this respect, it will also be appropriate to include in the by-laws a provision requiring shareholders to submit, among the documents supporting the candidature, the Nomad’s placet on those who will be eligible as independent directors.

3.2 New requirements for members of the board of directors and board of statutory auditors

Secondly, it has been provided that: (i) the members of the board of directors must meet the requirements of integrity referred to in Article 147-quinquies of the TUF; and that (ii) statutory auditors must meet the requirements of professionalism and integrity referred to in Article 148, paragraph 4, of the TUF.

So, AIM Italia issuers will have to make a further amendment to the by-laws, in order to provide that the members of the board of directors (whether appointed by the shareholders’ meeting or co-opted within the administrative body) and of the board of statutory auditors must meet the new requirements referred to in Article 6-bis of the AIM Italia Issuers’ Regulations [7]. The same by-laws must also provide that failure to meet the requirements will result in the forfeiture of the office.

On this point, it should be highlighted that Borsa Italiana has also amended Article 17 of the AIM Issuers’ Regulations in order to provide that the AIM Italia issuer must notify, inter alia, the failure to meet the requirements: (i) of independence by the independent director; (ii) of integrity referred to in Article 147-quinquies of the TUF by one or more directors; (iii) of professionalism and integrity referred to in Article 148, paragraph 4, of the TUF by one or more statutory auditors.

3.3 Investor relation

Finally, the AIM Italia Issuers’ Regulations require companies to designate an investor relations manager (even if not exclusively dedicated to such activity), in order to provide investors with an internal and constant reference point.

Said designation must be made and communicated to the market by 31 December 2020. In this regard, Borsa Italiana has specified that it will not be possible to fully outsource this function to an external provider.

It should be further noted that the AIM Italia issuer will have to inform the market of the waiver or revocation of the appointment by the investor relations manager pursuant to Article 17 of the AIM Italia Issuers’ Regulations, specifying the reasons thereof, where available.

4. Issuers’ obligations

With regard to periodic financial reporting, it is specified that the publication of the accounting documents accompanied by the auditors’ opinion, when mandatory (or when voluntary in the case of accounting documents other than the financial statements), must take place within the respective regulatory deadlines (i.e. three months from the end of the six-month reference period, for half-yearly reports (Article 18, AIM Issuers’ Regulations) and six months from the end of the financial year, for financial statements and annual reports (Article 19, AIM Issuers’ Regulations).

Failing this, Borsa Italiana will suspend securities from trading in case of delay in the publication of the documents or if the AIM Italia issuer has communicated to the market an approval time schedule non-compliant with the relevant publication deadlines.

Amendments relating to the regime for the publication of financial statements and half-yearly reports shall apply from the financial reports closing on or after 31 December 2020.

5. Purchase of treasury shares: quantity limits

Pursuant to Article 25-bis of the AIM Italia Issuers’ Regulations, similarly to the provisions for companies with shares held by the general public or listed on MTA, it is now provided that the nominal value of the shares purchased pursuant to Article 2357, paragraphs 1 and 2 of the Italian Civil Code may not exceed 20% of the share capital, taking into account for such purpose also the shares held by subsidiaries, except for transactions carried out before the entry into force of the new provision. This provision should apply to resolutions authorising the purchase of treasury shares adopted after 20 July 2020.

The content of this article is for information purposes only and does not constitute professional advice. For further information please contact Lukas Plattner and Andrea Iovieno.

[1] Special transitional provisions are provided from time to time for issuers already admitted to the AIM Italia market.
[2] So, the Panel will make its rulings without procedural formalities, in compliance with the adversarial principle, after hearing the offeror, Borsa Italiana, as well as the shareholders and any other party having a concrete and direct interest that may be affected by the rulings to be made. Indeed, the latter parties have been granted the right to refer the matter to the Panel in order to request its rulings with regard to any issue that may arise in connection with a takeover bid. The Panel must respond in writing, as soon as possible, and in any case within 45 days from the date on which it is requested to do so and consistently with the progress of the offer.
[3] In the light of the foregoing, it has been specified, in Article 41 of the AIM Italia Issuers’ Regulations, that should an offeror, following a takeover bid that has become effective and is expressly aimed at delisting the AIM Italia Issuer, including any setting of new deadlines (whether by law or voluntarily), hold more than 90% of a category of AIM Italia financial instruments, the delisting of such category of financial instruments may be put into effect without the prior consent of the shareholders and will be effective from the date that the offeror agrees with Borsa Italiana. Unless otherwise required, said date will coincide: (i) with the stock exchange trading day following the date of payment of the consideration for the bid; or (ii) if a new deadline for the bid has been set, with the stock exchange trading day following the date of payment of the new deadline; or (iii) if the AIM Italia issuer has made Article 108 of the TUF applicable by voluntary incorporation by reference into its by-laws, with the day following the last day of payment of the consideration for the bid launched pursuant to such reference; or (iv) in the event that the AIM Italia issuer has made Article 111 of the TUF applicable by voluntary incorporation by reference into its by-laws, the AIM Italia financial instruments which are the subject-matter of the purchases made pursuant to such reference will be suspended from listing and/or delisted, taking into account the time for the exercise of the statutory right to purchase.
[4] Borsa Italiana Notice No. 5958 of 25 March 2019.
[5] In particular, it should be noted that 57% of boards of directors include one independent director; 27% two independent directors; 12% a number of independent directors equal to or greater than three (source, IR TOP Consulting – Osservatorio AIM Italia, July 2019).
[6] It should be highlighted that Borsa Italiana has in any case recommended, in the interest of market issuers, that the provision be applied as promptly as possible.
[7] In this regard, it should be pointed out that Borsa Italiana has not specified the deadlines by which AIM Italia issuers must amend the by-laws with regard to the requirements of the members of the board of directors and the board of statutory auditors.