‘Transition 5.0’ Decree (Decree Law No. 175/2025) amends Italian FDI legislation

Law No. 4 of 15 January 2026 – in force since 21 January 2026 – converted Decree Law No. 175/2025 (also known as the Transition Decree 5.0) into law. It introduces significant amendments to the Italian Foreign Direct Investment (FDI or golden power) legislation.

The amendments concern Article 2 of Decree Law No. 21/2012, which governs how the government exercises FDI powers. The amendments aim to:

• promote coordination with proceedings of European authorities (such as the ECB and the European Commission) relating to the prudential assessment of share acquisitions in the financial, credit and insurance sectors, and merger control; and
• identify the conditions to justify exercising FDI powers. More specifically, the amendments include threats to “national economic and financial security” among the risks that may justify government intervention, provided that the state’s interests aren’t already protected by specific sectoral regulations.

 

Main changes

Standstill obligations for exercising FDI powers in the financial, credit and insurance sectors, pending EU proceedings (Article 2, paragraphs 4 and 6-bis, of Decree Law 21/2012)

The amendments to paragraphs 4 and 6-bis of Decree Law 21/2012 stipulate that the government can’t exercise its FDI powers with regard to transactions in the financial, credit and insurance sectors, while European authorities are conducting proceedings on prudential or competition matters concerning those transactions. In such cases, the time limits referred to in paragraphs 2, 2-bis and 5 of Article 2 of Decree Law 21/2012 for notifying the Presidency of the Council of Ministers commence once the proceedings have been concluded.

Conditions for exercising FDI powers (Article 2, paragraph 3, of Decree Law 21/2012)

Paragraph 3 of Article 2 of Decree Law 21/2012 already stipulates that FDI powers can only be exercised in “exceptional circumstances” that pose a serious threat to public interests relating to the security and functioning of networks and facilities and to the continuity of supply, and aren’t already covered by national or European sectoral legislation.

The amendment specifies that the sectoral legislation that the government must take into account also includes regulations on prudential requirements for acquiring qualifying holdings in the financial sector, as well as the merger control framework.

Including national economic and financial security as a condition justifying the exercise of golden powers (Article 2, paragraph 7, letter b-bis of Decree Law 21/2012)

The amendment to paragraph 7, letter b-bis of Article 2 of Decree Law 21/2012, includes threats to “national economic and financial security” as reasons for government intervention, provided that the state’s essential interests aren’t already protected by specific sectoral regulations.

This amendment neither broadens the scope of acts subject to FDI filing nor formally introduces new powers. But by referring to the new “economic and national security” condition, it effectively extends the scope of FDI powers.

Consequently, it strengthens the legal basis for intervention by the Presidency of the Council of Ministers, without formally amending the powers that can be exercised.

 

Practical implications

The Transition Decree 5.0 doesn’t amend the scope of transactions subject to golden power notification. But it does intervene on some aspects of the procedure and the conditions for exercising FDI powers.

At the operational level, the most significant change concerns proceedings relating to transactions in the financial, credit and insurance sectors. These proceedings will take longer and the time limits for filing FDI notifications will be extended due to the new coordination mechanisms with prudential assessment and merger control proceedings.

From a contractual point of view, operators should pay particular attention to conditions precedent, long stop dates and information and cooperation obligations between the parties, and extension/stop-the-clock mechanisms.

It’s also becoming increasingly important to ensure consistency between the dossiers submitted to the European authorities for prudential assessment and merger control proceedings, and the contents of golden power notifications (facts, governance, structure and rationale of the transaction).