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Capital Markets

Italy

A recently launched market, AIM Italia, gives small and medium-sized enterprises with strong growth potential the opportunity to access international venture capital. However, its success will ultimately depend on the company's determination to attract investment, the efficiency of the market's rules and the independence and impartiality of its nominated advisers.

Company & Commercial

Italy

Italian corporate legislation does not stipulate a rule on the share premium for ordinary corporate capital increases when the option right is not excluded. As such, there is a real risk that gaps in legislation may jeopardise the interests of minority shareholders.

Reforms to Italian company law have aimed to facilitate investment in listed companies by allowing for greater participation in shareholders' meetings by minority shareholders and investors residing outside Italy. This makes a minority participation a more attractive opportunity, especially for investors such as investments funds.

The courts are increasingly required to consider disputes under agency agreements between a principal from a non-EU state and an Italian agent operating in Italy. Where agreements include a forum-shopping clause, such disputes raise the question of how and where an Italian agent can claim against the principal.

An Italian joint stock company may issue shares that track the results of a specific line of business or a subsidiary. The value of tracking stocks depends on the return of assets by the division or subsidiary in question, but remains affected by the company's overall performance. Therefore, the company's bylaws and any shareholders’ agreements should provide for adequate regulation.

The extensive corporate reform introduced by Decree-Law 6/2003 has largely achieved its aim: the limited liability company is now distinct from the joint stock company, less expensive and more suitable for smaller corporations. However, numerous gaps in the legislative framework still present problems for parties intending to establish business entities in Italy.

Shareholders' agreements are subject to a five-year maximum statutory duration. Parties may not set a longer duration or contract for automatic compulsory renewal. This update considers when an arrangement is deemed to be a 'shareholders' agreement', reviews the issues arising from such definition in the context of different contractual and corporate structures and considers alternative mechanisms.

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Corporate Finance/M&A

International

The road to a successful deal holds a wide variety of challenges for both acquirer and target. Bridging the gap between different estimates of the target's value is a fundamental step towards a successful outcome. Various types of earn-out provision can help, but careful drafting is required to prevent future disputes.

Italy

Last year, the $21 billion Kinder Morgan bid for El Paso was challenged before a US court due to alleged breach of fiduciary duties by both advisers and company executives. A billion-dollar deal, a chief executive officer with underlying motives and conflicted investment banks are the perfect elements of a modern play with plenty of drama and plot twists for the international legal community. But what if this deal had happened in Italy?

When professional investors are entering into an investment agreement and can predict when the investment will reach maturity, a key consideration will be when and how to exit. A drag-along clause is one of the more interesting contractual clauses that may be included in agreements and bylaws to deal with exit issues.

As they are not specifically regulated in Italian law, representations and warranties - and the legal remedies available in the event of an infringement - have long been a source of controversy. Adopting certain precautions when drafting an acquisition agreement may save the acquirer from a number of costly mistakes.

New government powers of intervention and veto - affecting defence and national security, energy, transport and communications - are set to have a significant impact on investments by non-Italian entities. Among other things, they may give the government greater freedom to scrutinise sovereign fund investments, while Italian bidders for a target in a strategic sector may gain a crucial edge over foreign rivals.

In times of economic adversity, a material adverse change clause can be a vital part of an M&A agreement. However, such clauses do not provide clear-cut solutions and can raise problems of interpretation and enforceability, expecially if the crucial terms are vaguely defined. Parties concluding an agreement under Italian law should consider whether they can better protect their position by using additional remedies.

Deal makers are generally quick to see the positives in asset deals, and are often right to do so. However, crucial issues may arise from the fragmentary and ambiguous Italian legislation in this area. Advisers to acquirers and vendors must be aware of the divergent opinions in case law that may jeopardise the will of the parties.

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E-commerce

Italy

The Court of Milan's conviction of three Google executives for violating data protection law provoked strong reactions, with many commentators claiming that the legal grounds for the decision threatened the freedom of the Internet. The recent publication of the full text of the decision sheds more light on the case, correcting this view and spelling out the ramifications for the processing of sensitive personal data.

The Court of Milan has convicted three Google executives of violating Italian protection provisions in connection with a video, uploaded onto the Google Video website, of a boy with Down's syndrome being bullied by his classmates. In addition to violation of data protection provisions, the defendants were charged with defamation; their acquittal on the latter charge sheds significant light on the judge's reasoning.

In the event of a disputed registration of a '.it' domain name, a reassignment procedure is the quickest and least expensive option for trademark owners. However, this administrative procedure does not exclude possible future litigation. Interested parties should consider whether they are entitled to register or oppose registration of a '.it' domain name and how they can act in the event of a dispute.

According to recent press reports, Italy's tax police has been investigating the directors of Google's Italian subsidiary for tax evasion. Future developments could have wider implications for the e-commerce sector as Google's business and marketing model is common to many other internet companies, which may be forced to consider pre-emptive tax-structuring changes.

New legislation that allows for new online lotteries and new means of playing lottery-style games is likely to introduce online cash gaming in Italy. Other provisions implement changes in taxation and allow for measures to give operators greater choice in the betting products that they offer. However, the State Monopolies Authority retains broad control over the sector.

In a dispute centred on around 4,000 online audiovisual clips, Italian television network Mediaset is reportedly suing Google and video-sharing website YouTube for €500 million in damages before the Court of Rome. The claim raises significant questions about the liability of internet service providers, which has proved a problematic issue for the Italian courts.

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Information Technology

Italy

The Court of Milan's conviction of three Google executives for violating data protection law provoked strong reactions, with many commentators claiming that the legal grounds for the decision threatened the freedom of the Internet. The recent publication of the full text of the decision sheds more light on the case, correcting this view and spelling out the ramifications for the processing of sensitive personal data.

The Court of Milan has convicted three Google executives of violating data protection provisions in connection with a video on the Google Video website showing a disabled boy being bullied. It remains to be seen whether the reasoning seemingly applied by the judge conflicts with data protection law and its requirements in respect of the location of the data controller and the equipment used to process personal data.

The Data Protection Authority has applied a new provision of data protection law in imposing a €54,000 fine on supermarket group GS. The authority found that GS failed to inform customers that personal data collected as part of a loyalty scheme would also be used for profiling and marketing purposes.

In Italy, software is protected by copyright law. The right to the economic exploitation of software may be transferred or conveyed, but such a transfer must be evidenced in writing. However, the written-form requirement does not apply when assigning rights to the creator's employer, the entity that commissioned the software or a software house or development company.

The use of biometric data in Italy has grown rapidly in the past two years across many sectors. However, the use of fingerprint recognition technology in the banking sector for customers and personnel has proved particularly contentious. The Data Protection Authority recently reviewed the use of such systems by a number of banks and has reminded data controllers of their responsibilities.

The appointment of a commission to coordinate e-government and information society policies represents an excellent opportunity to introduce greater IT innovation into local government. The first projects on the commission's agenda include introducing electronic identification cards and providing high-bandwidth services for public workers.

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Leisure & Tourism

Italy

The State Monopolies Authority seems to have approached the regulatory leap into online and remote-access skill-based games with trepidation: forced by law to allow them, it has tried to do so in the most regulated and controlled way possible. Despite this approach, many aspects of the new regulations are unclear and potentially vulnerable to challenge by operators.

Betting operators and service users throughout Italy are familiar with punti di commercializzazione - shops or concessions which promote licensed online betting services and offer facilities for accessing such services. However, the gambling market has changed radically since the main regulating decree for such shops was introduced in 2006 and new legislation has put their future regulation in doubt.

The Italian authority with responsibility for granting a travel agency licence is the government office of the province in which the company in question intends to open the agency. The company must supply details of its corporate status and comply with certain financial and insurance requirements.

Gaming operators have welcomed the ruling issued by the European Court of Justice in the Placanica Case. Although the decision does not break new ground, it adds to the case law on the compatibility of Italian regulations on gambling with EU principles and confirms the principles established in the Gambelli Case.

The European Commission is once again preparing for infringement proceedings against Italy in relation to its restrictions on online gambling. The confusion over Italy's legislation and contradictory case law has highlighted the fact that the state is restricting betting services provided by operators without Italian licences while creating ever more licensed but inadequately monitored betting opportunities.

A month after an Italian civil court ordered interim measures in favour of the operators of a gambling website which had been blacklisted by the State Monopolies Authority, the list of unauthorized websites has been challenged again, this time before an administrative court.

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Media & Entertainment

Italy

A public consultation on the scheme of the new regulation for the allocation of available digital terrestrial television (DTT) frequencies recently closed. Once the European Commission approves the regulation, the Ministry of Economic Development will launch an auction for six DTT multiplexes. However, the upcoming general election could trigger some delay.

The Court of Milan has referred to the European Court of Justice (ECJ) for a preliminary ruling in connection with technological protection measures applied to video game consoles. The ECJ referral follows a dispute between Nintendo and PCBox Srl, which produces and markets devices aimed at bypassing the technological protection measures applied to Nintendo's consoles.

On-demand streaming of audiovisual content has raised several questions regarding proper compensation due to authors, producers and performers. Among these questions are how to apply both the term 'communication to the public' under the Copyright Law and the private copy exemption to streamed content, and how cloud services fit in with current regulations and guidelines.

In statements to Parliament, the former chairman of the Communications Authority has stressed that stakeholder agreements are crucial in making non-infringing media content available online. Commenting on the position of the content industry in regard to so-called 'over-the-top' operators, he cited an initiative by a group of Italian publishers to create a multi-device platform for the purchase of digital publications.

The Court of Justice of the European Union (ECJ) has issued a preliminary ruling on the compatibility of Italy's legal framework for gaming with the right of establishment and the freedom to provide services. Although the short-term impact on the industry may be limited, in the long term the State Monopolies Authority will be forced to adapt the framework to the principles indicated by the ECJ.

In January 2012 the grounding of the cruise ship Costa Concordia attracted intense media interest in Italy and abroad. Several issues have arisen in connection with a documentary that includes footage filmed by those onboard and a recording of a telephone call between the captain and the coastguard. Moreover, the incident is the subject of a criminal investigation and legal actions by many of the survivors.

More updates >

Product Liability

Italy

Italy's comprehensive product liability regime sets out the relationship between consumers, vendors and manufacturers in respect of goods. This update outlines the main rules on a producer's liability for defective products and a vendor's warranties for products under the Consumer Code.

Telecommunications

Italy

The Italian Data Protection Authority has recently dealt with the hot topic of unsolicited phone calls made by Italian telecommunications operators for commercial purposes. The issue was raised following complaints by customers who were annoyed at receiving a growing number of unsolicited calls promoting new products or services, many of the latter being activated without the customer's consent.