[co-author: Nicola Brunetti]*
Italy has been in the process of reforming its capital markets laws and regulations for several years with the goal of creating a simpler and more competitive regime that facilitates capital formation.
On October 8, 2025, a comprehensive reform of the Italian Consolidated Law on Finance, referred to as “TUF”, was approved, under preliminary review, by Italy’s Council of Ministers. The reform is expected to become effective in the first quarter of 2026.
Although the reform is comprehensive, these are the main changes impacting public offerings and listed companies:
- Newly Listed Companies and SMEs: The creation of a new and simplified optional regime for newly listed companies and small and medium-sized enterprises (“SMEs”) who have a market capitalization of less than €1 billion. This concept makes the regime more competitive with the U.S. regime, which provides concessions to emerging growth companies and other smaller entities.
- Takeover Bid Threshold and Best Price Rule: The mandatory takeover bid threshold would be 30% of voting rights or share capital for all companies (i.e. regardless of whether the company is a SME or a large company). Also, the relevant period for the best price rule would be reduced to six months to increase price accuracy and efficiency.
- Squeeze-Out: The relevant threshold for triggering the squeeze-out right following a tender offer would be lowered from 95% to 90%.
- Cash Merger: Italy would introduce a procedure similar to U.S. cash mergers as an alternative to takeovers. More specifically, the reform would provide purchasers with the ability to address an irrevocable offer for the acquisition in cash of the entire share capital of the target to its management body, which would evaluate its fairness and submit the offer to an extraordinary shareholders’ meeting. The relevant resolution could only be approved with the favorable vote of 2/3 of the voting shares (representing at least the majority of the share capital) attending the meeting, provided that the purchasing shareholder, those persons acting in concert with the purchasing shareholder, and anyone else with a significant stake (i.e., greater than 10%) would be excluded from the resolution, in accordance with the “whitewash” rule. This regime would only be applicable to companies listed on a regulated market, thereby excluding those listed on multi-trading facilities.
- Offering Document: The reform proposes to grant potential purchasers in a takeover the possibility to publish the offering document in English, along with an Italian summary dedicated to domestic investors. This proposal is intended to attract foreign investors by removing linguistic barriers.
The approved reforms to the TUF, coupled with other recent actions, are a strong indication that Italy is committed to deep and lasting reforms of its capital markets regime. Though results may not be immediate, we believe they will improve the country’s competitiveness and facilitate capital formation in the long term.
[1] Press Release of the Council of Ministers no. 144.
*PedersoliGattai
