Italy – New proposed IPO rules: English language prospectus and shorter timetable

White & Case LLPConsob initiated a public consultation concerning important new IPO rules aimed at simplifying and shortening the prospectus approval process and to reduce listing costs, which would bring Italian practice closer in line with EU legislation and EU practice. 

The key proposed changes would:

(i) permit Italian issuers to submit an English language prospectus which includes the prospectus summary in Italian;

(ii) shorten prospectus approval process; and

(iii) allow greater use of prospectus pre-filing.

The public consultation started by Consob is aimed at gathering the views of market players on the proposed changes and will close on February 6, 2022. Following completion of the consultation process, Consob will publish a paper on its conclusions, which will address the amendments to its Regulation no. 11971/1999 ("Issuers' Regulation").

Key proposed changes to prospectus rules

English language prospectus with Italian summary

Consob proposes to allow the use of an English language prospectus, with an Italian summary for the benefit of Italian investors. This approach would be in line with the practice of other EU Member States (e.g., France, the Netherlands, Luxembourg and Germany).

The possibility to draft the prospectus in English would materially reduce the overall time that the company, the underwriters and their respective counsels would need to prepare the offering documentation and permit focus on one document only, and, as a result, the related costs to be borne by issuers. 

Shorter and simpler prospectus approval process

Shorter approval process. Consob proposes to make the prospectus approval in Italy shorter and more flexible, in line with Regulation (EU) 2017/1129 (the "Prospectus Regulation") and practice of other EU Member States.

To date, Consob's review period for first-time issuers, as set out under the Issuers' Regulation, has a maximum duration of 60 business days from the submission of a complete application, which can be extended by Consob under exceptional circumstances up to 5 additional business days. In addition, no maximum duration is currently provided under Italian law in the event that the prospectus includes information on new extraordinary transactions, material changes to corporate governance structure or new financial information.

The proposed amendments would decrease the duration of Consob's review process for a first-time issuer to no more than 20 business days from the submission of a complete application. If Consob requests additional information (which typically occurs), the process would be extended by no more than 10 business days from the submission of a revised prospectus.

Simplification of approval request. Consob also proposes to limit its review of the prospectus approval application to the items strictly requested by the Prospectus Regulation. In order to implement this change, the application format appended to the Issuers' Regulation would be simplified by deleting any items that (i) are not strictly required under the Prospectus Regulation and (ii) have not caused material disclosure concerns based on Italian market practice.

The proposed changes demonstrate Consob's willingness to modernize and streamline the prospectus approval process in Italy by (i) shortening the prospectus approval time periods and (ii) removing any terms that are not strictly provided for under the Prospectus Regulation. We expect that these changes will decrease the time to market for Italian IPOs and the costs to be borne by first-time issuers. 

Greater use of prospectus pre-filing

Prospectus pre-filing. Consob proposes permitting issuers to (i) pre-file the prospectus ahead of the submission of the formal application in order to allow a preliminary assessment of the entire offering (rather than being limited to certain details or peculiarities of the offering, as currently allowed under the Issuers' Regulation) and (ii) submit drafts of certain sections of the prospectus, in each case, to shorten and facilitate the subsequent formal approval process.

Guidelines on pre-filing. Consob also anticipates issuing specific guidelines in the coming months to provide further instructions on the content of the prospectus pre-filing.

Pre-filing of prospectus with Consob has often been used in recent years to allow Consob to carry out a preliminary valuation of the peculiarities of a given deal or of the issuer that might otherwise result in a delay in the overall approval process. 

We believe that a more institutionalized use of pre-filing would allow faster and more efficient approval processes in Italy, with a subsequent decrease in time and costs to be borne by first-time issuers.

Conclusions

We believe that the changes proposed by Consob represent a strong push towards bringing the Italian prospectus approval processes closer with the current practice in other EU Member States. Such changes would definitely make the prospectus approval processes in Italy faster and more efficient

The firm has noted at several points in the past the advantages of drafting the prospectus in English also in Italy. We believe that these proposed measures, if adopted, will result in more issuers entering the Italian market, as well as making Euronext Milan a more attractive market for Italian and non-Italian issuers.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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