Italy Rules on Pledges on Shares Prior Notification

A landmark ruling limits foreign direct investment filing obligations to transactions involving immediate changes in control or governance.

For years, the Italian government required investors to file transactions involving the creation of pledges and guarantees on company shares deemed “strategic” under national foreign direct investment (FDI) regulations (i.e., Decree-Law No. 21/2012; Golden Power) to the Presidency of the Council of Ministers.¹

In a 5 December 2025 ruling (the Cedacri case) overturning the Lazio Regional Administrative Court (TAR Lazio)’s prior stance, the Council of State established that creating pledges on shares of strategic companies does not require prior notification under Italian FDI regulations, unless the transaction involves an immediate and concrete transfer of control or availability of the assets.

This decision marks a turning point for financing transactions in Italy. It requires financial operators to structure contractual clauses to avoid incurring a prior notification obligation under the Golden Power regulations.
 
Creation of Pledges Over Shares of Strategic Companies as Reportable Transactions

Historically, Italian government practice and administrative case law had interpreted the scope of the Golden Power notification broadly, stating that the creation of pledges on shares of companies holding strategic assets may be classified as a notifiable transaction. The approach reflected the view that creating a security interest constituted the first step toward a potential future transfer of the pledged collateral and that it needed prior monitoring by the government.

The first example of this approach occurred in the establishment of an in-rem security on owned shares of Open Fiber S.p.a.; in the context of the upsize of some loans. In a September 2018 decision the Council of Ministers authorized the transaction without exerting its special powers, recommending that the company and its shareholders file in advance the possible future enforcement of the security interests. More recently, the government took the same approach in the Prelios case (2024), where it requested that the notifying party file the creation of pledges related to the financing of the acquisition of Prelios by Ion.

Moreover, data² shows that, between 2016 and 2023, there were about 11 transactions notified and considered to fall within the scope of the Golden Power regulations, concerning, inter alia, the establishment/renewal of security (four concerned Open Fiber; three were intra-group transactions). Of these transactions, two concerned collaterals on strategic assets, and three concerned the pledge over shares. In the Milione case, a security was established over the company’s shares, without “causing any change in the corporate structure.”

Subsequently, in Judgment no. 10275/2024 of the TAR Lazio (First Division), the administrative court expressly confirmed for the first time the applicability of the Golden Power regulations to transactions involving the creation of pledges over shares. In particular, the ruling set out two key principles:

1. the notification cannot be postponed until the enforcement of the pledge, as this would frustrate the preventive function assigned to public control;
    
2. the filing obligation may arise even in the absence of a formal transfer of voting rights in favor of the pledgee upon creation of pledges.

This approach required financial and legal professionals to issue precautionary notices for nearly every secured financing transaction involving a “strategic asset,” thereby slowing down the deal execution process.

The Council of State Overruling (Cedacri Case)

The Italian Council of State overruled the TAR Lazio judgment in its Judgment no. 9619 of 5 December 2025 (Cedacri case). The administrative court of last instance stated that the creation of pledges over shares triggers an obligation to notify under the Golden Power regulations only where security arrangements result in an actual and immediate transfer of control, availability, or decisive influence over the underlying strategic assets.

Conversely, the Council of State expressly held that the creation of a pledge over shares cannot affect the availability of the relevant assets within the meaning of Article 2 of Decree-Law No. 21/2012 where:

• the pledgor retains full ownership as well as voting and administrative rights; and
   
• the secured creditor may only acquire such rights upon the occurrence of an event of default.

Consequently, only transactions that concretely and presently alter the governance or control structure of a strategic entity may fall within the scope of mandatory notification.

In other words, if the creation of the pledge is not combined with the attribution of governance rights to the pledgees — so that the pledgor retains full ownership, as well as voting and management rights in the target company until the possible occurrence of an event of default leading to enforcement of the pledge — no notification obligation arises under the Golden Power regulations. This is because, according to the Council of State, Article 2 of Decree-Law No. 21/2012 “must be interpreted as meaning that a transfer of shareholdings as collateral, which does not involve changes in the control structure of a strategic company, does not fall within the scope of application of the regulations in question, as it does not imply a change in the control of corporate governance.”

What Consequences Might Investors Face?

In light of the new case law, investors may wish to consider the following precautions when structuring secured financing transactions:

1. Review of the voting rights clause: Operators might consider confirming that the pledge agreement explicitly provides that voting and management rights remain with the debtor-shareholder until any event of default and enforcement. If voting rights transfer to the lender immediately upon creation of the pledge, notification remains mandatory. Operators should pay particular attention to pledges that grant the pledgee veto powers over matters strategic to the debtor company’s business (e.g., strategic investments, appointment of members of corporate bodies, or “key” executives) from the moment of signing. If such powers constitute “decisive influence,” notification may still be required despite the recent Cedacri ruling;
    
2. Golden Power condition precedents and enforcement of the security: Even if the Golden Power regulations were deemed inapplicable to the mere creation of a security interest in shares, their enforcement (which involves the transfer of ownership or voting rights) shall still require notification if the transaction concerns a company holding “strategic” assets within the meaning of the Golden Power. From that point of view, security arrangements shall still provide that enforcement of the security interest shall be subject to prior government approval;
    
3. Communications to the Golden Power authority: Even if formal notification may not be required, for major transactions — or where there is any doubt regarding the possible applicability of the Golden Power regulations — it may still be useful to consult with the offices of the Presidency of the Council of Ministers (through a pre-notification filing) to confirm the exemption from the notification obligation.

Conclusion

The Council of State’s ruling may help restore efficiency to the credit market by reducing bureaucratic burdens for strategic companies. However, investors and operators should still exercise caution: the line between “static guarantee” and “influence on governance” requires a case-by-case analysis of each security package.

Although the ruling excludes the notification requirement for a “pure” pledge, a gray area remains where the creditor acquires veto rights or powers of prior approval over ordinary management decisions. Consequently, from a strictly operational standpoint, investors should consider making any decision not to proceed with notification based on the Cedacri ruling and an adequate assessment.