Borsa Italiana: Amendments to Euronext Growth Milan Rules

    On 17 November 2023, by notice No. 43747 (“Notice”), Borsa Italiana S.p.A. (“Borsa Italiana”) informed the market of the introduction of certain significant amendments to the Euronext Growth Milan Issuer Rules, which will come into force on 4 December 2023.


    Below are the main changes applying to Euronext Growth Milan issuers (“EGM Rules”) and the relevant Guidelines, as well as the Euronext Growth Advisor Rules (“EGA Rules”), which are aimed at simplifying the regulatory framework and reducing costs and burdens for issuers in accordance with the market developments.


    The main changes concern: (i) the free float composition; (ii) the rules on Reverse Take-Over, with a special focus on suspension from trading; (iii) the verification of directors’ independence requirements, with a substantial alignment to the discipline applying to companies listed on a regulated market. As regards the provisions regarding independent directors, it will be necessary to assess possible amendments to the by-laws.

    1. Free float composition

    During discussions with trade associations and market operators, the need was identified to change the composition of the minimum free float required for admission to trading on Euronext Growth Milan in order to open up its composition to parties other than institutional investors.


    The amendment provides that: (i) at least 7.5% must be subscribed by at least 5 institutional investors (currently 10%); (ii) the remaining 2.5% may be subscribed by investors other than unrelated institutional investors or employees of the company or of the group (see Article 6 of EGM Rules, Part Two - Guidelines).

    1. Rules on trading suspension in case of Reverse Take-Over

    The current rules provide for suspension of trading in financial instruments upon announcement or leak of information regarding an agreed or pending Reverse Take-Over (“RTO”). Such suspension shall remain in effect until the issuer publishes the information document relating to the RTO transaction, accompanied by the related declarations of the issuer and of the Euronext Growth Advisor.


    Some traders have pointed out, on the one hand, that the suspension of shares during trading might discourage EGM-listed issuers from carrying out external growth transactions and, on the other hand, that Article 17, paragraph 8, of Regulation (EU) No. 596/2014 requires the  timely disclosure to the market of any leaked inside information in order to re-establish full parity of information. In light of said considerations, the current provision is removed with the clarification that trading will be suspended only in the event that the disclosure document (and related declarations) are not published at least 15 days prior to the shareholders’ meeting convened to approve the RTO ([1]) (see Article 14 of EGM Rules, Part Two - Guidelines).

    1. Definition of RTO

    In relation to the requirements constituting an RTO, the reference to transactions involving «a material change (...) in the board of directors or a change in control» is removed.


    Borsa Italiana deemed it correct to exclude from the definition of RTO any transaction that, while not exceeding the materiality thresholds, is characterised solely by a material change in the issuer’s board of directors. With regard to change of control, if material, it could trigger different rules such as the obligation to launch a takeover bid (see Article 14 of the Issuers’ Rules, Part One).

    1. Declarations in case of an RTO

    The current rules provide that, in the case of an RTO, some of the declarations of the Issuer and the relevant Euronext Growth Advisor may be submitted to Borsa Italiana also after the publication of the information document and the meeting approving the RTO, but at the latest close to the date when the RTO becomes effective.


    The Guidelines of the EGM Rules specify that, if the Issuer and/or the Euronext Growth Advisor avail themselves of said option, the effectiveness of the resolution of the shareholders’ meeting to approve the RTO will be subject to the issuance of the missing declarations. It is important to note that, if such declarations have already been issued at the time of the publication of the Information Document, it will not be necessary to issue them again close to the date when the RTO becomes effective (see, with respect to the issuer’s statements, Article 14, relevant Guidelines and Schedule Seven of the EGM Rules; with respect to the statements of the Euronext Growth Advisor, Article 14 and relevant Guidelines of the EGM Rules as well as Schedule Four of the EGA Rules).

    1. Independent directors

    The current provisions of the EGM Rules require the Euronext Growth Milan issuer to designate and maintain at least one independent director, chosen from among the candidates who have been previously identified or evaluated positively by the Euronext Growth Advisor.


    In its review, Borsa Italiana deemed it appropriate to remove such burden on the Euronext Growth Advisor in the phase following admission to trading, maintaining it only at the time of admission to trading.


    The board of directors will need to define, at least at the beginning of its term of office, quantitative and qualitative criteria for assessing, on a periodic post-admission basis, the materiality of any relationships, making such criteria public knowledge. In addition, the results of the verification must be disclosed to the public by means of an appropriate notice (see Article 6-bis of EGM Issuer Rules, Part One).




    This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For any further information please contact Lukas Plattner and Andrea Iovieno.






    News[1] It being understood that, as clarified in the relevant Guidelines, the suspension shall also apply in the event that, following the approval by the shareholders’ meeting and prior to the effectiveness of the RTO, the Euronext Growth Milan issuer and the Euronext Growth Advisor have not yet issued the additional declarations to Borsa Italiana and the Euronext Growth Milan issuer has not consequently published a notice of such issuance.

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