Italy – New Listing Rules

Borsa Italiana has released a new regulation, effective October 3, 2022, that simplifies the Euronext listing admission process.

Consistent with the listing rules of EU peer securities exchanges, the issuer and the sponsor (now referred to as the listing agent) will no longer be required to submit to Borsa Italiana the following documents:

(i) the budget and the business plan of the issuer.
However, issuers will still be required to (a) provide the listing agent (x) a budget (for the current year¹), (y) a business plan (for the following two years) and (z) evidence that its working capital is sufficient for its present requirements (in line with the statement required to be included in the prospectus) and (b) engage an auditing firm to issue a comfort letter on the budget²  to the listing agent;

(ii) the memorandum on the management control system (sistema di controllo e gestione), which describes the control system implemented by the issuer and its subsidiaries (the "MCS"). 
However, issuers will remain responsible for the implementation of a sound MCS and be required to confirm to Borsa Italiana, on the basis of the analysis made by an external auditor, that they have adopted a MCS; 

(iii) the company valuation document (documento a supporto della valutazione);

(iv) a report comparing the issuer’s corporate governance model with the one provided under the Corporate Governance Code; and

(v) an analysis of overdue debts.

Listing Agent

The new rules have also reshaped the role of the sponsor (now referred to as the listing agent), which will no longer be required to submit to Borsa Italiana the statements supporting the issuer’s budget and MCS and will be the contact person for discussions with Borsa Italiana. The Listing Agent will nonetheless remain responsible for a period of at least one year after the IPO date to (a) produce at least two researches on the issuer per year; and (b) organize and attend at least two meetings per year between the management of the issuer and professional investors, except in the event of the appointment of a Specialist (see below). 

Pursuant to the new rules, the listing agent should be either a global coordinator and/or a bookrunner. Under the previous regime, the role of sponsor had to be coupled with the role of the lead manager of the public or institutional offering. 

Specialist

Newly-listed issuers with presumed capitalization below €1 billion are required to appoint a specialist for the three years following admission. The specialist, which remains required for issuers listing on the Euronext STAR Milan, is in charge of (i) displaying continuous bids and offers with a percentage spread that does not exceed the limits and the amounts established by Borsa Italiana; (ii) producing at least two researches on the issuer per year; (iii) organizing and attending at least two meetings per year between the management of the issuer and professional investors.

Conclusions

These new listing rules are part of a broader reform aimed at simplifying the offering and listing process in Italy, which started last month with the issuance by Consob of new rules relating to the use of the English language for the prospectus and its review procedure. A summary of the consolidated changes enacted by Borsa Italiana and Consob is summarized at Annex 1.

In general terms, the new listing rules introduced by Borsa Italiana represent a simplification of the listing admission process, which will be less onerous and in line with other EU listing venues. 

Such rules have also eased the liabilities of the sponsor (now referred to as the listing agent), as it will no longer be required to submit to Borsa Italiana the statements supporting the issuer’s budget and MCS as well as the company evaluation document. The listing agent, however, will still be responsible for the appropriate due diligence of the business plan and the budget. 

Annex 1 – Summary of the main recent rules affecting the offering and listing of ECM prospectuses

_{1 If a listing application is submitted after September 15th, the budget is additionally required to cover the first six months of the following year.
2 The issuer is required to engage the assistance of an auditing firm, which shall certify to the listing agent that the budget figures have been determined by the issuer after a careful and thorough examination of the economic and financial prospects of the group or shall issue a special attestation prepared in accordance with the best international practice}

_{White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.}

_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

_{© 2022 White & Case LLP}