GOLDEN POWER: THE RUSSIA-UKRAINE CONFLICT ENHANCES THE GOVERNMENT’S SPECIAL POWERS.
With Law Decree no. 21 of March 21st, 2022 (the so-called Ukraine bis Decree), the Italian Government, introduced several amendments to the “Golden Power” discipline as part of the set of measures adopted in order to deal with the Ukrainian crisis. Such discipline, which is mainly based on the provisions of the Law Decree No. 21 of March 15th, 2012, determines the scope and manner through which the Government may exercise its special powers to safeguard the ownership structures of companies operating in sectors deemed strategic and of national interest.
The innovations introduced by Law Decree no. 21 of March 21st, 2022, are both of substantial nature, enlarging the sectors which fall under the Golden Power perimeter, especially with reference to the defense and national security sectors and communication networks, and of procedural nature, simplifying in some cases the notification process of the transaction.
From the substantial point of view, the main changes to the Golden Power discipline are the following.
– In the ambits of the defense and national security, the perimeter of the resolutions, acts or corporate transactions on which the Government may exercise its veto right has been expanded by including those acts or transactions resulting in changing of ownership, control or availability of assets held by companies that carry out activities of strategic importance for the defense and national security system, as well as the assignment of the same assets as guarantee.
– Purchases of participations in the communications, energy, transport, health, agri-food and financial sectors, including credit and insurance, are now subject to the notification to the Presidency of the Council of Ministers (“PCM”) also where the purchasers belong to the European Union, including those residents in Italy.
– In the telecommunications network sectors, in addition to broadband electronic communication services based on 5G technology, other services, goods, relationships, activities and technologies relevant to cybersecurity, including those related to cloud technology, are now considered of strategic importance for the defense and national security. In the sectors above, the notification procedure to the PCM will also be “enhanced”, as the purchaser shall also provide the PCM with an analytical yearly plan containing a detailed description of the transaction and the technologies functional to the same, as well as forecasts and modalities of development of the digitization systems.
– An evaluation and strategic analysis group (“nucleo di valutazione e analisi strategica”) made of ten members with acknowledged expertise in economic, legal and international relations fields is established within the PCM with the purpose of evaluating case by case the possible acquisitions, also availing itself of the collaboration of the “Guardia di Finanza”.
From a procedural point of view the following changes are worthy of remark.
– It has been introduced the possibility for the purchaser and the target to proceed with a joint notification to the PCM; where the notification is made by the purchaser only and the target company operates in certain sectors, including energy, transport and communications, the latter shall be informed in order to participate in the procedure, with the right to submit briefs and documents to the PCM. A positive aspect of the joint notification is that, should the PCM request further information to the target company, the latter, as notifying party, shall reply within 10 days from such request, and not within the 20 days term currently applicable to third parties; this would allow to reduce the overall timing for the conclusion of the procedure in certain sectors such as, for example, defense and national security.
– The pre-notification regime is introduced, e. the possibility of submitting the transaction to the prior assessment of the Government in order to verify whether the Golden Power discipline is applicable to the specific case or not.
– In the event of a unanimous decision of the Coordination Group on the non-applicability of the Golden Power discipline to the concerned transaction, the resolution of the Council of Ministers will no longer be necessary for the definition of the entire procedure.
m.patrignani@macchi-gangemi.com
a.frau@macchi-gangemi.com
THE COUNCIL OF MINISTERS APPROVES THE DRAFT LEGISLATIVE DECREE ON THE BUSINESS CRISIS AND INSOLVENCY CODE: WHAT ARE THE MOST RELEVANT CHANGES?
On 17 March 2022, the Council of Ministers approved, at first reading, numerous amendments to the code. The main one concerns the replacement of the measures of alert and assisted settlement of the crisis that were provided for in the code, with the negotiated settlement (a tool developed and introduced by the legislator with Decree Law No. 118 of 24 August 2021) now included in the new Title II of Part One of the code, headed “Negotiated settlement of the crisis, single national platform, simplified arrangement and reports for the early emergence of the crisis”.
Last 17 March, the Council of Ministers approved, at first reading, the Draft Legislative Decree on amendments to the Code of Business Crisis and Insolvency (so-called CCII) referred to in Legislative Decree No. 14 of 12 January 2019, implementing EU Directive 2019/1023 (so-called Insolvency Directive), the provisions of which aim to ensure the proper functioning of the internal market and the full exercise of the freedoms of movement of capital and establishment through the harmonisation of national legislation and procedures. Insolvency Directive), the provisions of which aim to ensure the proper functioning of the internal market and the full exercise of the freedoms of movement of capital and establishment through the harmonisation of national legislation and procedures on preventive restructuring, insolvency, exdebitation and disqualifications.
The amendments introduced mainly concern: (i) the disappearance of the OCRI and the business crisis indicators referred to in Article 13 of the previous text of the CCII and the replacement of the alert and assisted settlement measures by the negotiated settlement; (ii) the preventive restructuring frameworks; (iii) the exdebitation procedures and disqualifications; (iv) the establishment of the restructuring plan subject to homologation; and (v) a strong push for a greater and more efficient use of the business continuity arrangement.
At the urging of the European legislator, the Italian legislator has renamed the “crisis or insolvency regulation procedures” using the term “preventive restructuring frameworks”, in analogy with the expression used in Title II of the Insolvency Directive. Frameworks that are intended to cover all crisis resolution tools as an alternative to insolvency proceedings and defined as “measures and procedures aimed at the reorganisation of the firm by changing the composition of its status or the structure of its assets and liabilities or capital”, which allow debtors an early recovery that can prevent insolvency by avoiding the liquidation of healthy firms. The measures should at the same time prevent the loss of jobs as well as knowledge and skills and maximise the total value for creditors, compared to what they would have received in the event of liquidation of the company’s assets or in the case of the best possible alternative scenario in the absence of a plan.
The reference to “economic-financial imbalance” introduced by Legislative Decree 147/2020 has been removed and the term “crisis” has been amended as follows: “the state of the debtor which makes insolvency likely and which is manifested by the inadequacy of prospective cash flows to meet obligations over the next 12 months“.
Among the most important changes, the Scheme fills what has been described by many as a gap in Article 2086 of the Civil Code, indicating as relevant warning signs for the timely detection of the state of crisis: (i) the existence of payables for wages and salaries overdue for at least thirty days amounting to more than half of the total monthly amount of wages and salaries; (ii) the existence of payables to suppliers overdue for at least ninety days amounting to more than the amount of the payables not overdue (iii) the existence of exposures to banks and other financial intermediaries which are more than sixty days past due or which have exceeded for at least sixty days the limit of credit facilities obtained in any form whatsoever provided that they represent in the aggregate at least five per cent of the total exposures; (iv) the existence of one or more exposures to tax authorities and social security institutions within the thresholds set out in the new Article 25-novies, paragraph 1, of the CCII.
New reporting requirements are also adopted for qualified public creditors – Agenzia delle Entrate (Italian tax authority) , INPS (National Social Insurance Agency), INAIL (National institute for insurance against industrial injuries) and Agente della riscossione (collection agency) – for which a significant reduction (compared to what was initially foreseen in the CCII) of the thresholds of relevance of the values leading to their activation is established.
As evidence of the special attention paid to the issue of employee protection under the Insolvency Directive, an obligation to consult trade unions has been included for employers with more than 15 employees who intend to adopt the measures provided for in a preventive restructuring framework.
In Title II of the CCII, entitled “Negotiated Crisis Resolution, Single National Platform, Simplified Arrangement and Reporting for the Early Emergence of the Crisis“, the negotiated resolution rules, as anticipated, replace the alert and assisted resolution procedures by introducing tools for reporting by qualified creditors and communication by credit institutions.
Significant changes have been made to the rules on composition with creditors on a going concern basis. Among others, they include:
(i) the simplification of the admission phase;
(ii) the amendment of the asset distribution rules with a double distribution rule depending on the nature of the distributed resources;
(iii) the mandatory formation of classes also for preferential creditors (with the sole exception of those paid in full, in cash and within one hundred and eighty days from the approval provided that the guarantee accompanying the mortgage or pledge remains in place until the liquidation of the asset or right on which the cause of pre-emption exists);
(iv) the elimination of the maximum period of two years from the approval for the moratorium;
(v) the express indication of the parties affected and not affected by the plan, individually or by categories of debts;
(vi) the accompaniment of the court-appointed administrator by the debtor and the creditors in the negotiation of the plan, when required or in case of granting of protective measures on the company’s assets;
(vii) the requirement of unanimity of the classes for the approval of the proposal and the plan. The class is deemed to be consenting if a majority of the claims represented in it vote in favour; failing this, the class in which two-thirds of the voting claims have voted in favour is also deemed to be consenting, provided that at least half of the claims of the class have voted. In the event of dissent by one or more classes, the debtor shall nevertheless be allowed to apply for approval when the conditions set forth in Article 112 paragraph 2 are jointly met, namely: a) the liquidation value is distributed in compliance with the graduation of the legitimate causes of pre-emption, b) the value exceeding the liquidation value is distributed in such a way that the claims included in the dissenting classes receive overall treatment at least equal to that of the classes of the same rank and more favourable than that of the classes of a lower rank, (c) no creditor receives more than the amount of its claim, (d) the proposal is approved by a majority of the classes, provided that at least one of them consists of creditors having pre-emptive rights, or, failing that, the proposal is approved by at least one class of creditors who would be at least partially satisfied respecting the ranking of the legitimate causes of pre-emption also on the value exceeding the liquidation value;
(viii) approval of the composition when, according to the proposal and the plan, the claim is satisfied to an extent not less than the judicial liquidation, even when a dissenting creditor objects to the proposal being unsuitable;
(ix) a maximum time limit of twelve months for the approval starting from the submission of the application for a prior restructuring framework;
(x) the suspension of the right of withdrawal of the shareholders until the implementation of the plan when the plan provides for the completion, during the procedure or after its approval, of operations of transformation, merger or division of the debtor company.
A restructuring plan subject to homologation (PRO, i.e. a restructuring framework that can disregard the principle of distribution according to par condicio creditorum but will only be homologated if approved by all interested parties in each voting class) was introduced and the rules on exoneration were innovated (the causes of ineligibility and disqualification linked to the opening of judicial liquidation are to be removed).
s.rossi@macchi-gangemi.com
g.bonfante@macchi-gangemi.com
PICASSO’S LAUNCH INTO CRYPTO ART?
Earlier this year, Pablo Picasso’s granddaughter Marina and her son Florian, a DJ and music producer, have announced they would have minted more than 1,000 NFTs based on an exclusive work by the renowned artist: a large ceramic bowl sculpted in 1958 that, until now, no one outside the family had known about or even seen. The Cubist master’s great grandson, attempted to rebrand the “Man and the Beat” drop as a sale of his own original NFT, despite having originally promoted the digital works as Pablo Picasso’s first foray into crypto art.
“Visage de Couleur”, the first part of Florian and Marina’s drop, featuring five NFTs offered in an edition of 200 each, was released for a price of 2.0 Ether (approximately $6,200) by means of a dedicated website on February 1st, at 6:30 pm ET. The other two parts of the sale “Visage de Demain” and “Visage de Lumière” have both been released on Nifty Gateway on February 3rd, with auctions starting at 6:30 pm ET. “Visage de Demain” is a one-of-one NFT, while “Visage de Lumière” has 10 editions, sold in a ranked auction over 24 hours. The 10 winning bidders paid between $4,000 and $5,655 each for “Visage de Lumière”, while “Visage de Demain” scaled up to $41,500. A portion of proceeds were donated to the charity “Nurse Heroes” and the climate-focused non-governmental organization “Carbon180”.
Despite the uplifting scope underlying the ambitious project, it appears that the heirs have announced Picasso’s “new” work of art without sharing the project with the other parties holding rights into the artist’s works. The Picasso Estate has in fact vehemently rejected the project, which means any that NFTs created in the name of Pablo Picasso is technically a counterfeit, as confirmed by a statement on the Estate’s website reading: “Mrs Marina Ruiz-Picasso, Mr Florian Picasso, the Administrator of the Estate Picasso, Mr Claude Ruiz-Picasso, as well as Picasso Administration, would like to point out that, to date, there is no “Picasso” NFT authorized by the Estate Picasso, the NFT of Mr Florian Picasso, and the artists with whom he collaborates, being their own creation, independently of any claim in reference to Pablo Picasso and his works. The information given by the Media that the heirs of Picasso had entered the Pablo Picasso NFT market is therefore totally erroneous”.
In response to this, Marina and Florian Picasso have released a statement claiming exclusive affiliation for the crypto-art project, hence confirming the work to be considered as a “Florian Picasso NFT”, embodying “the genesis collection of a long-term ambition we have”.
While the project has shed all claims of affiliation with Picasso and sales related thereto seem to have proved uninspiring so far, there might still be one reason to invest in a Florian Picasso NFT: in fact, one of the most significant draws to this specific sale was that it would be accompanied by an auction, hosted by Sotheby’s New York, of the ceramic bowl that inspired the crypto-art project. The renowned auction house, however, denied any involvement with the NFT aspect of the sale, expressly clarifying via press statements that it will not be selling an NFT of a work by Pablo Picasso.
Crypto art represents the perfect combination of creativity, technology and security, as it encompasses all forms of art involving either the digitisation of a physical work or the creation of a new one from scratch. The secret for success seems to lie in the fact that NFT technology is deemed as a new way for artist to securely certify the authenticity of works and guaranteeing the right of ownership for purchasers, in a world where the risk of unauthorised reproduction and distribution of works via the Internet is an ever up-merging trend. This new frontier in the world of art is clearly disrupting the classic standards of fruition: the artist’s signature and the certificate of authenticity have been adapted to the new needs imposed by the digital market, while sales transactions have moved to special platforms where cryptos are conceived as the sole bargaining chip.
In the meantime, Florian Picasso still plans on selling his NFTs on Origin Protocol in the future.
Thus, We just have to wait to see what is going to be the next creation entering the world of crypto art.
m.baccarelli@macchi-gangemi.com
m.lonero@macchi-gangemi.com
FAILURE TO ADOPT A REGULATION ON THE USE OF IT TOOLS: THE DATA PROTECTION AUTHORITY SANCTIONS A COMPANY.
The Data Protection Authority has sanctioned a company for being in breach of the principle of fair processing and for having, therefore, processed its employees’ personal data in an unlawful manner.
The Data Protection Authority’s activity originated from a complaint filed by a worker following failure to delete the company’s e-mail account resulting from the termination of employment relationship, as well as the refusal to allocate to the employee the company’s telephone number (which, prior to employment was the worker’s private one). Furthermore, the company sued the worker and provided its lawyers with the private conversations between the worker and his wife (which were recorded on the mobile phone).
As part of the defense carried out, the Company stated that the complainant, former Managing Director, was fully aware of the company policy that had to be adopted and that he refused to sign the regulation (approved in any case after his dismissal).
The Data Protection Authority established that some processing operations did not comply with the General Data Protection Regulation 2016/679 so-called GDPR. In particular, with reference to the verifications carried out on the employee’s company computer, the Data Protection Authority confirmed that these verifications were carried out in the absence of a company regulation informing employees of possible inspections, as well as of an adequate information.
The subsequent implementation of the regulation and the fact that it was the complainant himself who had to approve such documents are of no relevance, since the responsibility to diligently adopt a company regulation on the use of IT tools lies with the company, as data controller.
In conclusion, the Data Protection Authority sanctioned the company for the processing of data carried out on the company’s PC, in the absence of adequate information and regulation on the use of electronic tools, quantifying the sanction in Euros 10,000.
The regulation on the use of IT tools is a fundamental tool in every company, especially in those that grant the use of mobile IT devices to their workers. It is necessary that this document is always updated and complied with, because, as we have seen, even a minimal breach can lead to a sanction and, above all, to reputational losses deriving from the publication of the decision (the company’s name is on all search engines). In addition, the implementation of the aforesaid regulation must be accompanied by appropriate information to employees.
r.demarco@macchi-gangemi.com
f.montanari@macchi-gangemi.com
CAN THE TAX AUTHORITIES STILL ASSESS THE 2015 TAX YEAR?
The tax assessment deadline for the 2015 tax year have finally expired, even considering the Covid-19 emergency provisions, and this is the case also if the taxpayer has not filed the income tax return.
As is known, for tax years up to 2015 the ordinary deadline for sending the notice of assessment was December 31 of the fourth year following the year in which the income tax return was filed, or the fifth year following the year in which the income tax return should have been filed, without prejudice to the doubling of the terms in case of criminal relevant cases.
Therefore, for the case the taxpayer has filed the income tax return, the assessment term for 2015 tax year would have expired on December 31, 2020. However, as a result of the provisions of article 157 of Law Decree no. 34/20 (the so-called “Decreto Rilancio”) – which envisaged, for tax assessment expiring between March 8 and December 31, 2020, to be notified in the period between March 1, 2021 and February 28, 2022 – the notice of assessment, which had to be issued by this date, could be effectively served by February 28, 2022.
On the other hand, in case the taxpayer has not filed the income tax return, as a result of the provisions of art. 67, paragraph 1, of Law Decree no. 18/2020 (the so-called “Decreto Cura Italia”) – which had determined the suspension of the terms for inspection by the tax authorities from March 8 to May 31, 2020 – the ordinary deadlines for sending the notice of assessment has been extended by 85 days, from December 31, 2021 to March 26, 2022. The date of December 31, 2021 – the standard deadline for the assessment – has been extended by 85 days due to the suspension provided by the Decreto Cura Italia.
This rule is generally applicable and, as also clarified by the Tax Revenue Office during the traditional meeting with professionals at the beginning of the year (Telefisco 2022) – determines an extension of 85 days of the assessment deadlines for recurring taxes for all the years whose deadlines are pending along the period between March 8, 2020 and May 31, 2020. In other words, the 85-day postponement also applies to periods after 2015 and up to 2018. For these years the “stop” to inspections between March 8, 2020 and May 31, 2020 is also reflected in the time limits for any dispute regarding the abuse of rights. It should be mentioned, in fact, that on the basis of the rule on abuse of rights (article 10-bis of Law no. 212/2000) the request for clarifications must be forwarded by the tax authorities to the taxpayer within the deadline for notification of the tax assessment.
In conclusion, for the 2015 tax year the deadline for the submission of the notice of assessment has now definitely expired, also in light of the provisions introduced to respond to the Covid-19 emergency. For the years up to 2018, the deadlines of December 31 of the fifth year following the year in which the income tax return was filed, or the seventh year following the year in which the income tax return should have been filed, are extended by 85 days.
g.sforzini@macchi-gangemi.com
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