Italy's regulatory framework

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Regulatory framework

Below is a brief description of the main regulatory measures issued during 2012 that affect the Company.

Italian Law no. 10 of 17 February 2012 laying down "Urgent provisions on the settlement of the sovereign debt crisis and regulation of the civil proceedings", published in Italian Official Journal no. 42 of 20 February 2012."

With a change to Article 14 of Italian Law No 183 of 12 November 2011, amending Article 2477 of the Italian Civil Code on the subject of statutory and independent auditors, this Law introduced a transitory measure stating that, for limited liability companies, “boards of statutory auditors appointed by 31 December 2011 shall remain in office until the natural expiry of the mandate resolved by the shareholders' meeting that appointed them”.

Italian Law no. 14 of 24 February 2012, “Extension of the terms envisaged by legislative measures”, published in the Italian Official Journal of 27 February 2012.

The law contains rules on taxation. It is specified that the single rate of 20% introduced by Italian Law Decree 138/11 applies (Article 29):

  • from 1 January 2012 with reference to interest and other income “deriving from current and deposit accounts held at banks or post offices, even if represented by certificates, accruing from that date” and not, therefore, to interest and income which accrued previously and is paid out from 2012;
  • from the day after the maturity date of the forward contracts stipulated prior to 1 January 2012 and with a duration of no more than 12 months in relation to capital income, such as income deriving from repurchase and forward contracts on securities and currencies and interest and other income from bonds and similar securities pursuant to Italian Legislative Decree no. 239 of 1996 ("interest, premiums and other income from bonds and similar securities, public and private").

The starting date of the obligation, introduced by the 2008 Budget, for tax substitutes to electronically communicate the salary data and information necessary to calculate tax withholdings and contributions each month, most recently established as January 2012, is postponed to January 2014, after experimentation, from 2013, with methods established jointly by the Tax Authority and the National Social Security Institute.

Finally, the starting date for operation of SISTRI is postponed from 9 February 2012 to 30 June 2012. Under the Conversion Law the date by which the Ministry of Employment, in agreement with the Ministry of the Economy, must define with a decree the implementation methods and the maximum numerical limits of persons granted access to a pension according to the rules in force before the reform of 2011 (Italian Law Decree no. 201 of 2011) was postponed from 28 March to 30 June 2012. Again on the subject of pensions, the scope of application of the requirements in force before Italian Law Decree no. 201 of 2011 was extended to other categories of workers, including workers whose employment terminated before 31 December 2011, “in application of collective redundancy incentive agreements signed by the unions comparatively most representative at the national level” and “workers who as of 31 October 2011 are on leave to assist children with serious disabilities… who acquire, within twenty-four months from the starting date of said leave, the contributory requirement for the right to a pension independently of their age”.

Italian Law Decree no. 1 of 24 January 2012 setting out "Urgent provisions for competition, development of infrastructures and competitiveness", published in the Italian Official Journal no. 19 of 24 January 2012, converted by Italian Law no. 27 of 24 March 2012, published in Italian Official Journal no. 53 of 24 March 2012.

This Law Decree provides that, “In order to facilitate and accelerate creation of the network infrastructures of national interest, at the reasoned request of the concession holders the Authority for Electricity and Gas shall appraise the application received for identification of the single regulated assets, defining the related remuneration within 90 days from receiving said request”.

For the gas industry, it refers to a Prime Ministerial Decree, to be adopted by 31 May 2012 for the definition of the “criteria, terms and methods with which SNAM S.p.A. is to comply in adopting, within 18 months from the date of entry into force of the conversion law, the ownership separation model pursuant to Article 19 of Italian Legislative Decree no. 93 of 2011”. Under the same decree, “full independence of SNAM S.p.A. is ensured in relation to the largest gas production and sale company, and to the vertically integrated natural gas and electricity production and supply companies”.

The law establishes that without prejudice to the annual nature of the National Transmission Grid Development Plan and of the assessment, public consultation and approval procedures, the plan shall be subjected once a year to verification of whether it is subject to the SEA procedure and, in any case, once every three years, to the SEA procedure. The Law also contains measures relating to the systems for protection and defence of the grids and security devices that must be installed in production plants. Finally, it is stated that, by 23 May 2012, the Ministry for Economic Development, “after consulting with the Authority for Electricity and Gas, shall issue guidelines and modify insofar as it is competent the rules for implementation” of the reform of the electricity market regulations provided for under Italian Law Decree no. 185 of 2008 for the purpose of “containing costs and guaranteeing the security and quality of electricity supplies, also through recourse to flexibility services, in compliance with market criteria and principles”. The Conversion law introduced a new rule on bond or debt security issues on the part of operators of the national electricity and gas transport networks, which states that “Holders of authorisations for the construction of infrastructures which are part of the National Electricity Transmission Grid Development Plan” and owners of gas transport and storage infrastructures and regasification terminals may “issue bonds and debt securities, also by way of exception to the limits pursuant to Articles 2412 [bond issue limits] and 2483 [on debt securities] of the Italian Civil Code”. In particular, Article 2412 of the Italian Civil Code states that “The company may issue bearer or nominative bonds for a total amount not exceeding twice its share capital, legal reserve and available reserves resulting from the last approved financial statements”.

 

Decree by the Ministry for Employment and Social Policy of 20 January 2012 on the "Deferment of the entry into force of the Decree of 11 April 2011 laying down the Regulation of the method by which regular checks are performed pursuant to Attachment VII to Italian Legislative Decree no. 81 of 9 April 2008 and criteria for qualifying subjects pursuant to Article 71, paragraph 13 of the same Italian Legislative Decree", published in the Italian Official Journal no. 19 of 24 January 2012.

Italian Law Decree no. 2 of 25 January 2012 setting out “Extraordinary and urgent measures regarding the environment”, published in the Italian Official Journal no. 20 of 25 January 2012, converted with amendments by Italian Law no. 28 of 24 March 2012 converting the Law Decree on “Extraordinary and urgent measures regarding the environment”, published in the Italian Official Journal no. 71 of 24 March 2012.

Italian Law Decree no. 5 of 9 February 2012 on “Urgent measures on simplification and development” published in the Italian Official Journal no. 33 of 9 February 2012, converted with amendments by Italian Law no. 35 of 4 April 2012, published in the Italian Official Journal no. 82 of 6 April 2012.

As regards joint stock companies, the Conversion law (Article 35) repeals the provision pursuant to Article 2397 of the Italian Civil Code, already amended by the law decree, which stated that, where not otherwise provided for in the Articles of Association and in any case under certain conditions, the duties of the board of statutory auditors may be performed by a single auditor.

With reference to limited liability companies, it remains possible to provide for a collegial auditing body in the articles of association, as an alternative to a single auditor; in fact, it is stated that the articles of association of such companies “may provide for the appointment of an auditing body or an auditor, determining their duties and powers, including statutory auditing of the accounts. If the Articles of Association do not state otherwise, the auditing body is made up of a single regular member”.

Paragraph 2 of Article 2477 of the Italian Civil Code has been amended and now states that “In the case of appointment of an auditing body or a single auditor, the rules applied are those for the board of statutory auditors envisaged for joint stock companies”.

The decree introduces new rules on the subject of failure to complete proceedings within the terms (Article 1): each administration identifies from among its top management a person to be given the power of substitution, to be exercised in the case of inertia of said administration in issuing the measure. When, in fact, the term for conclusion of the procedure provided for by law has passed, private individuals or bodies may apply to the designated manager “so that, within a term equal to half that originally provided for, he or she may complete the proceeding through the competent structures or by appointing a commissioner”.

The decree also states (Article 57-bis) that a Prime Ministerial Decree, acting on a proposal by the Minister for Economic Development, shall, by the end of July 2012, identify the energy infrastructure located within the country and for interconnection with other countries considered to be priorities, which, implementing Article 3 of Italian Legislative Decree no. 93 of 2011 represent the “minimum needs of construction or expansion” for which “the administrations involved for any reason in procedures to authorise the infrastructures identified … attribute… priority and urgency to the formalities and assessments for which they are responsible”. Identification of the infrastructures is updated at least every two years.

In an amendment to Article 109 of the Environmental Code (Article 24) it is stated that authorisation for discharge into the sea of excavated materials “shall be issued by the Region, with the exception of work carried out in national protected areas … for which it shall be issued by the Ministry for the Environment and for Protection of the Territory and the Sea”.

Finally, the decree provides for the establishment of the National Data Bank of Public Contracts from 1 January 2013 (Article 20): the documentation proving possession of the requisites “of a general, technical-organisational and economic-financial nature” for participation in the procedures governed by the Contracts Code will be acquired from 1 January 2013 exclusively by the National Data Bank, established at the Authority for Supervision of Public Contracts for Works, Services and Supplies.

 

Italian Legislative Decree no. 24 of 2 March 2012 on the “Implementation of Directive 2008/104/EC, on work through temporary agencies”, published in the Italian Official Journal no. 69 of 22 March 2012.

Italian Law Decree no. 16 of 2 March 2012 on “Urgent measures for fiscal simplifications, and for making more efficient and strengthening assessment procedures” (known as "Fiscal simplifications") published in the Italian Official Journal no. 52 of 02 March 2012, converted with amendments by Italian Law no. 44 of 26 April 2012, published in the Italian Official Journal no. 85 of 28 April 2012.

Italian Law Decree no. 21 of 15 March 2012, containing “Regulations on the subject of special powers over corporate structures in the defence and national security sectors, and for activities of strategic significance in the energy, transport and communications industries”, published in the Italian Official Journal no. 63 of 15 March 2012, converted with Italian Law no. 56 of 11 May 2012, published in the Italian Official Journal no. 111 of 14 May 2012.

The decree contains new rules on the special powers of the State, in order to adapt Italian legislation to the sentences of the Court of Justice of the European Union issued on the subject.

By 12 September 2012, regulations adopted by the Government, shall identify the “networks and plants, including those necessary to ensure minimum supplies and operation of essential public services, assets and relationships of strategic significance for the national interest in the energy, transport and communications industries”. The same regulations will indicate the type of actions or operations within a single group to which the rules contained in the decree do not apply. Companies that manage the assets identified by the regulations are obliged to notify the Prime Minister's Office within 10 days and in any case before implementing actions or operations and Resolutions relating to management of said assets. Over Resolutions, actions or operations subject to the rules provided for in the decree, within 15 days from notification, the Government may, by decree of the Prime Minister, impose a veto or prescribe conditions to which effectiveness of the action, Resolution or operation is subordinated if they give rise, on the basis of objective criteria (the existence of links with criminal organisations and/or a threat to the security and continuity of supplies and the security and operation of the assets) “to an exceptional situation, not governed by national and European legislation on the industry, of a threat of serious prejudice to the public interest relating to the security and operation of the networks and plants and to continuity of supplies”. Until the notification is made and the term for expression of the veto has passed, the effectiveness of the resolution, action or operation is suspended. When said term has passed and no measure has been adopted by the Government, the operation is understood as authorised. With entry into force of the implementing decrees, the legislation previously in force establishing the golden share (Article 2 of Italian Law Decree no. 332 of 1994 and decrees implementing the rules) is to be repealed. 

Joint Decree of the Ministry for Economic Development and the Ministry for the Environment of 15 March 2012 on the “Definition and qualification of regional targets on the subject of renewable sources and definition of management methods in cases of failure to achieve the targets by the regions and autonomous provinces” (so-called “Burden Sharing”), published in the Italian Official Journal no. 78 of 2 April 2012.

The measure specifies the targets - intermediate and final, for 2020 - which regions and autonomous provinces must achieve to contribute to the national target of 17% of gross consumption covered by energy produced by renewable sources.

In defining the regional targets, the condition of the electricity grid and the actions planned by Terna were considered. These were judged to be “adequate to cope with the growth of renewable electricity sources, envisaged by the regional division” envisaged by the Decree.

Italian Law Decree no. 29 of 24 March 2012 laying down “Urgent measures” to supplement Italian Law Decree no. 1 of 24 January 2012, and Italian Legislative Decree no. 385 of 1 September 1993, and amendments to Italian Law no. 249 of 31 July 1997, converted, with amendments by Italian Law no. 27 of 24 March 2012, published in the Italian Official Journal no. 117 of 21 May 2012.

It amends the rules of Italian Law Decree no. 1 of 2012 on the subject of legality ratings. By 20 August 2012, with a regulation, the Authority for Competition and the Market will outline criteria and methods for awarding ratings. Companies operating in Italy which reach a minimum turnover of €2 million may ask the ACM to award them a legality rating. “The rating awarded is taken into consideration when public administrations grant loans and when banks grant credit, in accordance with the methods laid down in a decree by the Minister of Economy and Finance and by the Minister for Economic Development, to be issued by 20 August 2012”.

Italian Law Decree no. 52 of 7 May 2012 containing “Urgent measures to rationalise public spending”, published in the Italian Official Journal no. 106 of 8 May 2012, converted with Italian Law no. 94 of 6 July 2012, published in the Italian Official Journal no. 156 of 6 July 2012.

This Law Decree amends the Contracts Regulation (Italian Presidential Decree no. 207 of 2010) establishing that, both in relation to public contracts concerning work, and in relation to public contracts concerning supplies and other services, in the event of an award with the criterion of the most economically advantageous offer, “The commission shall open in public session the envelopes containing the technical offers in order to check for the presence of the documents produced”.

 

Italian Law Decree no. 59 of 15 May 2012 containing “Urgent measures to reorganise civil protection”, published in the Italian Official Journal no. 113 of 16 May 2012.

Italian Law Decree no. 73 of 6 June 2012 containing “Urgent measures on the subject of qualification of companies and overall guarantees of execution”, published in the Italian Official Journal no. 131 of 7 June 2012.

Italian Law Decree no. 74 of 6 June 2012 on “Urgent action in favour of the populations affected by the seismic events which involved the territory of the provinces of Bologna, Modena, Ferrara, Mantua, Reggio Emilia and Rovigo, on 20 and 29 May 2012”, published in the Italian Official Journal no. 131 of 7 June 2012.

This Law Decree provides for Terna's participation in the temporary Single Commission for authorisations of actions to delocalise and rebuild businesses.

 

Italian Legislative Decree no. 78 of 12 June 2012 on the Implementation of Directive 2010/35/EU, on transportable pressure equipment which repeals Directives 76/767/EEC, 84/525/EEC, 84/526/EEC, 84/527/EEC and 1999/36/EC, published in the Italian Official Journal no. 138 of 15 June 2012.

Italian Legislative Decree no. 91 of 18 June 2012, containing “Amendments and additions to Italian Legislative Decree no. 27 of 27 January 2010, implementing Directive 2007/36/EC, on the exercise of certain rights of shareholders of listed companies”, published in the Italian Official Journal no. 152 of 2 July 2012.

The Legislative Decree amends the rules on the subject of shareholders' rights and in particular:

  • clarifies expressly that the shareholders' meeting may be called by the managing director or by the Board of Directors and not by single directors;
  • states that, if not otherwise provided for in the By-laws, the shareholders' meetings of companies that have recourse to the risk capital market shall be held in a single call;
  • enables shareholders and regulates the possibility, for all those who hold voting rights, to ask questions on the matters on the agenda also before the shareholders' meeting, and to present proposed resolutions on subjects already on the agenda with the procedure provided for in Article 126-bis of the Consolidated Law on Finance;
  • states that the bondholders' meeting may be called, as well as by the representative of the bondholders, also by the Board of Directors and by the management committee;
  • defers to a Consob regulation the identification of the methods and terms of communication, on request, in the cases and to the subjects identified by the regulation itself, of the data identifying owners of the financial instruments and the intermediaries holding them, subject to the possibility for owners of financial instruments to prohibit expressly the communication of the data identifying them;
  • given that: 1) Italian Legislative Decree no. 27 of 2010 stated that the right to take part in the shareholders' meeting and to vote must be attested by a communication to the issuer, made by the intermediary, in favour of the subject holding the right to vote; 2) for meetings of bearers of financial instruments admitted to trading with the issuer's consent on regulated markets or in Italian multilateral trading facilities or in those of other European Union countries, the communication provided for is made with reference to the term of the accounting day on the seventh open-market day prior to the date set for the meeting, the Legislative Decree states that, to this end, “reference shall be made to the date of first call provided that the dates of any subsequent calls are indicated in the single notice of call; otherwise reference shall be made to the date of each call”;
  • regulates the obligations to publish the documents that will be submitted to the meeting and the information on the amount of the share capital;
  • by way of exception to Article 4 of Italian Law 1745 of 1962 which ties the right to dividend payments to possession of shares at the so-called coupon detachment date, gives greater flexibility to the issuer, stating that “the right to payment of profits and of other distributions related to the financial instruments recorded in the accounts indicated in Article 83-quater, paragraph 3, is determined with reference to the evidence of accounts relating to the end of the accounting day identified by the issuer which also establishes the related methods of payment.";
  • admits the possibility of stating in By-laws that each share held by the same shareholder for a continuous period indicated in the By-laws, and in any case not less than one year or also “than the shorter period running between two consecutive annual dividend payment dates”, shall give the right to a supplement of not more than 10 per cent of the dividend distributed to the other shares.

Italian Law no. 92 of 28 June 2012 "Rules on employment market reform with a view to growth", published in the Italian Official Journal no. 153 of 3 July 2012.

This Law provides for changes to the rules on temporary contracts, project work, self-employment, traineeships, dismissal and redundancy incentives.

Italian Law Decree No. 83 of 22 June 2012 containing “Urgent measures for the growth of the country”, published in the Italian Official Journal no. 147 of 26 June 2012, converted with Italian Law no. 134 of 7 August 2012, published in the Italian Official Journal no. 187 of 11 August 2012.

This Law Decree envisages, for bonds issued by 26 June 2015 by companies pursuant to Article 157 of Italian Legislative Decree no. 163 of 2006, subjection to the same tax regime envisaged for public debt securities, which entails taxation at 12.5% (in place of the current 20%), and elimination of the limits on deductibility, now linked to the effective rate of return, of interest expense.

An amendment to Italian Law no. 239 of 2004, which governs authorisation of the NTG infrastructure, envisages that in proceedings to authorise the national electricity transmission grid, the lack of regional approval, which must be issued within the maximum term of 150 days from the request of the Ministry for Economic Development, can be remedied by the Prime Minister's Office which shall act in the matter with the participation of the region involved.

The Law Decree suspends the term for entry into operation of the System, already set at 30 June 2012, “until […] checks have been completed and in any case not later than 30 June 2013”. A decree of the Ministry for the Environment will set the new term for entry into operation of the SISTRI System and, until that term, payment of the contributions payable by users for the year 2012 is suspended.

Finally, the Law Decree envisages, starting from 26 June 2012, for all businesses, a contribution, in the form of a tax credit of 35%, with a maximum limit of €200 thousand per business, of the corporate cost incurred for taking on in permanent employment persons in possession of a university research doctorate or a degree in a technical or scientific discipline engaged in Research and Development work.

Other provisions, which were introduced in the amending Law, provide for the identification of the power output requirements which need to be satisfied in order to ensure that power from oil-fuelled installations is available to the electricity grid, on the basis of the information highlighted by the Committee for the gas emergency and by Terna.

 

Italian Legislative Decree no. 123 of 22 June 2012 setting out "Implementation of Directive 2009/109/EC amending Directives 77/91/EC, 78/855/EC and Directive 2005/56/EC with regard to obligations relating to reports and documentation in the event of mergers and spin-offs", published in the Italian Official Journal no. 180 of 03 August 2012.

Italian Law Decree no. 95 of 6 July 2012 setting out "Urgent measures for the revision of public spending without changing citizen services", published in the Italian Official Journal no. 156 of 6 July 2012, converted, with amendments, by Italian Law no. 135 of 7 August 2012, published in the Italian Official Journal no. 189 of 14 August 2012.

This Law Decree suspends the increase on VAT, deferring the increase of two percentage points from 1 October 2012 to 30 June 2013, as envisaged by Italian Law Decree no. 98 of 2011. It enables the regions subjected to the financial stabilisation plan to apply the increased IRPEF [personal income tax] rate early, up to a maximum of 1.1%.

It also provides for the reorganisation of the Ministry of Economy and Finance, the absorption of the Agency of the Territory (the land registry) by the Revenue Agency and a right of option for Cassa Depositi e Prestiti (the Deposits and Loans Bank) on equity interests held by the State in Fintecna, Sace and Simest.

Decree of the Ministry for the Economy and Finance of 7 August 2012, published in the Italian Official Journal no. 210 of 08 September 2012.

The Decree implements Article 157, paragraph 3 of Italian Legislative Decree no. 163 of 2006, where it is established that "Bonds and debt securities, until the start-up of operations of the infrastructure by the concession holder, can be guaranteed by the financial system, by foundations and private funds, according to the methods defined by Decree of the Ministry for the Economy and Finance jointly with the Ministry for Infrastructures and Transport".

It identifies the parties who are able to provide guarantees on project obligations and establishes their term and release method.

 

Decree no. 161 of 10 August 2012, "Regulation setting out the methods for the use of excavation land and rocks", published in the Italian Official Journal no. 221 of 21 September 2012.

Italian Legislative Decree no. 184 of 11 October 2012 on the “Implementation of Directive 2010/73/EU amending Directives 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading and 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market” published in the Italian Official Journal no. 253 of 29 October 2012.

Italian Law no. 190 of 6 November 2012 laying down Provisions to prevent and punish corruption and illegality in the public administration, published in the Official Journal no. 256 of 13 November 2012.

Italian Law Decree no. 174 of 10 October 2012 “Urgent provisions on finance and the operation of local authorities, and further provisions in favour of the areas affected by the May 2012 earthquake”, published in the Official Journal no. 237 of 10 October 2012, converted into Italian Law no. 213 of 7 December 2012, published in the Official Journal no. 286 of 7 December 2012.

The Decree extended the time limit for the presentation of the IMU declaration [single municipal tax on property] relating to properties for which the requirement to file a return arose after 1 January 2012. The time limit, which had already been extended by Italian Law Decree no. 174 of 2012 from 30 September until 30 November, has been extended further to ninety days after publication in the Official Journal of the decree approving the IMU return form and the relative instructions, which was adopted on 5 November 2012. The new time limit has therefore been set for 3 February 2013.

Italian Law Decree no. 179 of 18 October 2012 “Urgent measures for the growth of the country”, published in the Italian Official Journal no. 245 of 19 October 2012, converted into Italian Law no. 221 of 17 December 2012, published in the Italian Official Journal no. 294 of 18 December 2012.

All projects relating to the national grid which are to be subject to an Environmental Impact Assessment (EIA) or a control as to whether they are to be subject to an EIA have been placed under the competence of the Ministry of the Environment.

The adoption of legislation on agreements on environmental compensatory measures relating to energy infrastructure by Decree of the Ministry of Economic Development is envisaged, to be issued in concert with the Ministry for the Economy and Finance, after obtaining the opinion of the Joint Assembly.

The entry into force of the rules on the provision of the service in order to ensure the security of the national electricity grid in the major islands (“super-interruptibility” in Sicily and Sardinia) has been extended until 2015.

Italian Law no. 228 of 24 December 2012, the “2013 Stability Law”, published in the Italian Official Journal no. 302 of 29 December 2012.

In relation to tax matters, the law provides for an increase from 1 July 2013 of the 21% band only (which has therefore been increased to 22%). Provision has been made for increases in IRPEF deductions for dependent children, and €950 million have been allocated in 2013 for experimental measures in order to increase productivity in employment.

The Law has introduced a tax on financial transactions involving equity instruments and derivatives, as well as high-frequency trading.

In cases involving equity instruments, the rate has been set at 0.2 percent on the value of transactions transferring “shares and other equity instruments”, including in cases involving shares transferred as a result of their conversion into bonds”. For 2013, the tax has been set at 0.22 percent. The rate of the tax has been reduced to one half for transfers occurring on regulated markets and multilateral trading facilities. In those cases, for 2013, the tax has been set at 0.12 percent. The tax will be applied to transactions concluded after 1 March 2013.

 

Italian Decree of 28 December 2012 on the “Incentivisation of the production of thermal energy from renewable sources and small-scale energy-efficiency interventions”, published in the Italian Official Journal no. 1 of 2 January 2013. 

Italian Decree of 20 December 2012 on the “Determination of the arrangements and conditions applicable to imports and exports of electricity for 2013”, published in the Italian Official Journal no. 2 of 3 January 2013. 

Italian Decree of 23 November 2012 laying down “Terms and conditions governing participation of the thermo-electrical industry in emergency situations, and the reduction in gas consumption for thermal year 2012/2013”, published in the Italian Official Journal of 13 December 2012.