Author: | Published: 9 Nov 2000
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In the first eight months of 2000, the number of initial public offerings (IPOs) has surged, with 28 companies being newly listed in Italy during the period, mostly on the New Market (Nuovo Mercato).

Compared to 1999, the number of newly listed companies has doubled – there are more than 250 listed companies on the Italian Stock Market and more than 20 on the Italian New Market (created in June 1999 for companies with high growth potential and/or companies belonging to highly innovative sectors).

The increase seems unstoppable, as more than 100 companies (90 on the New Market alone) have started (or expressed their intention to start) formal procedures for initial public offering and listing within the next two years.

Requirements for listing on the Stock Market

Companies that want to be listed on the Stock Market need to meet a number of formal requirements concerning the issuer and the shares to be listed.

In connection with the issuer, the companies need to be duly incorporated and their by-laws must comply with the laws and regulations applicable to them. Secondly, companies need to have published and filed their accounts relating to the last three fiscal years, and at least the most recent financial statement must be audited. The company must also carry out, either directly or through its subsidiaries and without external interference, a business activity capable of generating profits. Specific requirements are set out for foreign issuers, and for shares issued by Italian companies which are subject to the laws of a foreign country.

Shares must be issued in accordance with the laws, regulations and any other applicable provision, must comply with the laws and regulations to which they are subject, and must be freely transferable. Furthermore, an estimated market capitalization of at least L10 billion, or the equivalent amount in euro is required. Finally, shares must have a sufficient distribution among the public, a condition which is met when free floating shares are equal to at least 25% of the capital.

Exceptions to the above requirements may apply in particular cases.

Luca Arnaboldi
Partner: based in Milan, Head of the Securities and Corporate Finance Department of the Firm.

Education: University of Milan (JD); Lecturer on financial law at University of Milan and Rome; Director of several SIM (brokerage companies) and multinational companies; author of numerous publications based on the television industry and telecommunications law; active as a speaker at conferences, as well as freelance journalist.

M & A, corporate finance, media and telecommunications, internet; assisting numerous multinational companies of the media, telecommunications and internet sectors, as well as the leading European security companies; maintaining close contact with the leading international investment banks represented in Italy, providing them with advice.

Massimo Trentino

based in Rome, Co-Head of the Securities and Corporate Finance Department of the Firm.

Education: University of Rome (JD, with dissertation at London School of Economics 1990); University of Pennsylvania (Master of Laws, LLM 1995); Lecturer on banking law at Italian Bar Association 1999;

Practice: securities and financial services, assisting leading investment banks in capital markets transactions and investment firms in regulatory matters.


Requirements for listing on the New Market

To be listed on the New Market, certain requirements must be met by issuers and shares.

The requirements for issuers are the same as those for listing on the Stock Market, but with two differences:

  • publishing and filing the audited accounts relating to one fiscal year is sufficient; and
  • the company's net assets on application for admission to trading need to amount to at least L3 billion (or the equivalent amount in euro). There is no minimum requirement for profit, turnover and volume of assets.

There are also specific requirements for foreign issuers.

Shares must be issued in accordance with the laws, regulations and any other applicable provision and must be freely transferable. The requirement of sufficient distribution is deemed to be met when at least 20% of the company capital represented by ordinary shares is held by the public or by professional investors. Sufficient distribution must be achieved by a minimum public offer of L10 billion (or the equivalent amount in euro), represented by a minimum number of shares of 100,000; at least half of the offer must be constituted by newly issued shares, and the unit offer price cannot be lower than 10 euro or the equivalent amount in Italian lire.

Exceptions to the requirements concerning sufficient distribution and the minimum value of the offer may apply in particular cases.

A further peculiar requirement for admission to listing on the New Market is the lock-up clause. This clause establishes that shareholders holding more than 2% of the ordinary share capital, and directors and managers (regardless of their shareholding) shall undertake, as of the date of application and for a year starting from the date trading begins, not to sell, offer, pledge or in general carry out any action concerning 80% of the ordinary shares of the company held by them as at the date of application.

Duties for listing

An application for admission to trading must be submitted to Italian Exchange Spa by the issuer, following approval by resolution of the competent body. The admission decision will take effect subject to the filing of a Prospectus with Consob.

Indeed, at the same time that the issuer applies to Italian Exchange Spa, it should send Consob an application for authorization to publish the Listing Prospectus, accompanied by the Listing Prospectus and other documents set forth in the Consob Regulations. In the event of admission to listing being preceded by a public offering (to meet the requirement of a sufficient distribution of shares to a large number of investors), the application may be used to inform Consob of the intention to make a public offering of the financial instruments to which the application refers. In such a case, the Listing Prospectus also serves as the Information Prospectus for the offering if it contains the relevant information.

The Information/Listing Prospectus must contain all the information that, depending on the characteristics of the financial instruments and the issuer, permits investors to make an informed assessment of:

  • the issuers' assets and liabilities, profits and losses, financial position and prospects;
  • financial instruments and related rights; and
  • the public offering.

Particular duties are set forth in the Consob Regulations for the recognition in Italy of prospectuses approved by the competent authorities of other EU member states.

The three phases of an IPO

The listing procedure essentially consists of three phases. The first phase includes all the preliminary steps that the company needs to take before formally applying for listing:

  • shareholders' meeting and board of directors' resolutions to go public and, eventually, increase the corporate capital;
  • the appointment of specialist advisers (reporting accountants, lawyers, financial public relations consultants) and the sponsor (a financial intermediary that assists companies through the listing stage and in the after-market, and that may also play the role of global coordinator);
  • the appointment, with reference to the New Market, of the specialist who will publish financial and summary analyses concerning the issuer, organize meetings with the management of the company, and display continuous bids and offers;
  • legal/economic/financial due diligence activity;
  • drawing up of the Information/Listing Prospectus; and
  • submission of the formal application for admission to listing and for the authorization to publish the Prospectus.

The second phase centres on Consob and the Italian Exchange Spa investigation of the formal applications, and includes:

  • Italian Exchange Spa approval of the resolution admitting the company to trading; and
  • simultaneous authorization from Consob to publish the Information Prospectus.

The third and final phase of the listing procedure focuses on the public offering of the shares to be listed, and includes:

  • publication of the Information Prospectus;
  • successful trading of the public offering;
  • notification of the offering results; and
  • Italian Exchange Spa approval, as the final instrument of the entire listing process, of the resolution authorizing the start of trading of the shares on the stock markets.

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