The latest amendments to the AIM Italia market rules under the market test

On august 14, 2020 the first company admitted to listing on the AIM segment reserved to professional investors named AIM PRO Italia

Prepared by Cristina Cengia

The rules of the AIM Italia market (the “Market” or “AIM Italia”) has been subject to significant amendments in July, as per Borsa Italiana’s notice no. 17857 of July 6, 2020 (the “Notice”), which mainly concerned the AIM Italia Rules for Companies, providing for a series of innovations, including, in particular, the provision of a new market segment restricted to professional investors.

1. Rules on the Panel in relation to public takeover bids and cancellation

First of all, the function of the Panel has been amended, so that it has assumed a binding decision-making role also for matters relating to public takeover bids, and, moreover, from now on:

  1. the Panel’s functions shall include, inter alia, taking decisions, either beforehand or afterwards, in relation to mandatory takeover bids;
  2. the Panel, acting pursuant to Article 1349 of the Italian Civil Code, shall make any rulings that are appropriate or necessary for the correct execution of the offer (including those that may relate to the setting of the offer price), to be made without procedural formalities and in accordance with the adversarial principle;
  3. the Panel shall make binding rulings on the companies and their shareholders, which shall be disclosed through publication on Borsa Italiana’s website.

2. Admission requirements to AIM Italia

A novelty has been introduced with regard to the requirements that must be satisfied by companies for admission to AIM Italia, and, in particular, with reference to the method of calculating the free float percentage, for the purpose of which shareholdings subject to lock-up, even those with a duration of less than 6 months, shall no longer be calculated.

3. The Designated Markets

Some “Designated Markets” have been identified in order to reserve a dedicated procedure, as well as a substantial simplification of the information set required by the admission document for companies applying for admission to AIM Italia (i) whose shares have been traded on a Designated Market in the 18 months prior to the above mentioned application for admission to AIM Italia, and (ii) whose market capitalization is at least equal to Euro 10 million.

4. Obligations of companies

Amongst the obligations provided for the issuers, Borsa Italiana: (i) made clarifications regarding the obligations of communication and publication of financial information, calendar of corporate events, information to be provided in the event of renunciation or revocation of the Nomad, further detailing the content, terms and conditions of such obligations, in order to clarify and/or align with market practices; (ii) updated Rule 25-bis of the Guidelines, pursuant to which the nominal value of the treasury shares may not exceed one-fifth of the share capital, taking into account also the shares held by subsidiaries for this purpose; and furthermore (iii) intervened on the corporate governance rules, providing that: (a) the company must appoint and maintain at least one independent director, who meets the independence requirements established for statutory auditors by Article 148, paragraph 3, of the Legislative Decree no. 58/1998 (the “TUF”), chosen from among the candidates who have been previously identified or evaluated positively by the Nomad; (b) the directors appointed by the company must meet the requirements of integrity pursuant to Article 147-quinquies of the TUF and the statutory auditors must meet the requirements of experience and integrity pursuant to Article 148, paragraph 4, of the TUF; and (c) within December 31, 2020, the company must also identify and maintain within its organizational structure a professionally qualified person (investor relations manager) who has the specific (but not necessarily exclusive) task of managing relations with investors.

5. Mergers of a listed company into a not-listed subsidiary: rules for the admission

Again for simplification purposes, the rule concerning the set of information required for the admission of a private subsidiary of a company already listed on AIM Italia, following the incorporation of the AIM Italia company into such subsidiary, has been amended. Since the substance of the perimeter of the listed company does not change, the admission may take place without having to fulfil the information requirements that would be necessary in case of an effective new listing.

6. Convertible bonds and warrants

It has been clarified that in case the company intends to exclusively issue warrants and/or convertible bonds on AIM Italia whose underlying shares are listed on a European regulated market, the Nomad rules will not apply to them. Only the relevant provisions regarding admission to trading, subsequent obligations and procedures for investigating breaches of the rules shall apply to that company, to the extent they are consistentwith the nature of the securities admitted to trading.

7. The suspension power of Borsa Italiana and the s.c. penny stock

The scope of the faculty of Borsa Italiana of suspension from trading has been extended in order to facilitate the orderly trading, so that Borsa Italiana may now order the suspension also in case of:

  1. the official prices of the shares are below the minimum threshold of euro 0.01 for a continuous period of six calendar months (the s.c. penny stock);
  2. a company intends to carry out an extraordinary transaction which could result in a theoretical share price below the abovementioned minimum threshold of euro 0.01; and
  3. a company intends to carry out an indivisible share capital increase that is not secured by subscription guarantees.

8. Research obligations

The companies listed on AIM Italia must always retain an appointed specialist in charge of producing or commissioning to produce on its own account at least two researches per year concerning the company as well as to publish them promptly on Borsa Italiana’s website and, in any case, no later than one month after the publications of the financial statements.

9. Introduction of a segment restricted to professional investors

Lastly – but not least, being by far the most relevant innovation – as of July 20, 2020, AIM Italia has a professional segment where trading is restricted only to professional investors (the “Professional Segment”), intended as those listed in Annex II, part 1 and 2 of the Mifid Directive 2014/65/EU, named AIM Pro Italia. Pursuant to the AIM Italia Rules for Companies, the Professional Segment has several simplifications in terms of conditions of admission and continued eligibility, in consideration of the nature of the investors and is mainly dedicated to:

  1. just-listing of companies that do not have an immediate need to raise capital and prefer to wait for better market conditions than those they have to face in the offer process or that wish to increase their visibility with investors before proceeding with an offer;
  2. start-up and scale-up companies that have been marketing their products/services for less than a year and/or have yet to commence all the strategic functions/processes envisaged by the business model; it should be noted that these companies can only be admitted to the Professional Segment. Instead, Biotech companies characterized by a business model focused on research projects and on the development of innovative biopharmaceutical products may instead access the retail segment of the AIM Italia market, as long as they have successfully concluded the preclinical test phase.
  3. companies that intend to raise capital through an offering of a complex product not suitable for retail investors.

In the event that a company applies for admission to the Professional Segment, the minimum free float of 10% of the share capital must be distributed among at least 5 investors who are neither related parties nor employees of the company or group, and who can also be non-institutional or non-professional investors. For the purposes of the formation of the free float, no placement is required. Moreover, where the minimum free float is less than 10% of the share capital, but nevertheless greater than or equal to 2% of the share capital, or the minimum number of investors is not ensured or the investors are related parties or employees of the company or the group, Borsa Italiana may admit the company to trading, ordering the simultaneous suspension of trading until the above requirements are fully met. By doing so, the company will have 2 years to meet the necessary requirements for access to trading in the Professional Segment. Otherwise, in case of unsuccessful expiry of this period, Borsa Italiana may order the delisting of the company.

In addition to the above, it has also been provided that although trading in this Professional Segment is restricted to professional investors, sales may be carried out also by non-professional investors solely when they are shareholders existing at the date of admission to the Professional Segment.

A particular procedure is reserved to SPACs admitted to the professional segment that announce a reverse take-over. Indeed, in this case it is not required publication of an admission document (and the related Nomad certificates).

As anticipated, it should be noted that the first company to enter the Professional Segment of AIM Italia is Fenix ​​Entertainment S.p.A., a company operating in the production, co-production and distribution of film, television and music content, founded in Rome in 2016.

The company placed 377,500 shares for a total value of 1.51 million euros, the free float at the time of admission was 15.88% and the market capitalization was equal to 9.51 million euros.

About ten days after its debut in the Professional Segment, the company maintains its price well above that of the IPO. In fact, as of 25 August 2020, the issuer is quoting at 5 euros per share for a capitalization of around 11.9 million, after being placed at 4 euros with an initial capitalization of 9.51 million.

The underwiters were assigned free warrants in the ratio of one warrant for each share held.

Let’s Talk

For a deeper discussion, please contact:

Cristina Cengia

PwC TLS Avvocati e Commercialisti

Of Counsel