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The Council of State's December 2025 ruling reshapes Golden Power notification obligations for share pledges — and your acquisition term sheet may already be wrong
Your term sheet goes to the other side next week. It contains a standard condition precedent requiring Golden Power notification before the security over Italian shares is created. Your lender client's Italian counsel flagged it six months ago. You kept it in. Now, after the Council of State's December 2025 ruling in the Cedacri case, that CP may be unnecessary — or it may still be exactly right. It depends on one clause buried in your security agreement that most commentaries have not yet addressed.
Here is what changes in the next 30 days if you do nothing: your CP language will be reviewed by the other side's counsel in light of Cedacri, it will be called conservative or redundant, and you will be asked to drop it. If you drop it without analysing your covenant package, you may be removing the notification obligation from the transaction while the covenants that trigger it remain in the security document. That is not a saving. That is a timing violation with a fine of up to €150,000 and a potential veto of the transaction.
After Cedacri, the answer is: not always at creation, but always at enforcement. That is the rule in one sentence.
The Golden Power regime — introduced by Legislative Decree No. 21 of 2012 (D.L. 21/2012) and most recently amended by / substantially amended by Legislative Decree No. 175 of 2025 (D.L. 175/2025) — requires advance notification to the Presidency of the Council of Ministers prior to completing any transaction that confers, directly or indirectly, control or decisive influence over an Italian company operating in a strategic sector. Those sectors include defence, energy, transport, electronic communications, financial services (banking and insurance), healthcare, food supply, and water.
Prior to 5 December 2025, standard Italian government practice and lower-court authority required notification at pledge creation if the pledged company operated in any of those sectors. Lenders and their counsel responded by adding a condition precedent: the pledge could not be registered until clearance had been granted or the 45-day review period had elapsed without a veto.
The Council of State's ruling in Consiglio di Stato, Section IV, No. 9619 of 5 December 2025 (Cons. Stato, Sez. IV, 5 dicembre 2025, n. 9619) — the Cedacri case — overturned that blanket rule. The Court held that where a pledge is structured as an improper pledge (pegno irregolare), with the pledgor retaining all voting and administrative rights until default, the act of creating the security does not of itself confer control or decisive influence and therefore does not require prior notification.
The Cedacri case concerned the acquisition financing of Cedacri S.p.A., a provider of IT services to Italian banks and therefore firmly within the financial sector falling under the Golden Power regime. The pledge was a standard financial collateral arrangement: the creditor held the shares as security but exercised no governance rights while the company performed normally.
The Council of State confirmed that the relevant test is not the legal form of the transaction but its substantive effect on the exercise of control. A pledge that transfers nothing more than the economic title of the shares — leaving voting rights, board appointment rights, and operational decisions entirely with the pledgor — does not meet the threshold. The Court characterised the notification obligation as triggered by the acquisition of poteri di influenza determinante, meaning powers of decisive influence, not by the mere entry of an encumbrance on the share register.
Nemo plus iuris transferre potest quam ipse habet — no one can transfer more rights than they hold. The Latin maxim captures the Court's logic precisely: a pledgee who holds no governance rights cannot have acquired the influence the Golden Power regime is designed to regulate.
The ruling has immediate practical consequences. In a straightforward, properly structured pledge without governance covenants, the Cedacri decision removes the creation-stage notification requirement. Lenders operating under Italian-law security agreements with clean pegno irregolare structures can reasonably re-examine whether a CP for pre-creation clearance is legally required — or whether it has become a commercial risk management tool rather than a legal obligation.
As the legal theorist Roberto Unger observed in his work on the indeterminacy of legal rules, the gap between a rule's stated scope and its operational reach is widest precisely where commercial practice has outpaced legislative intent. The Golden Power regime was designed to protect state security, not to regulate every form of financial collateral. Cedacri is the courts catching up.
Here is what the published commentaries do not say, and what matters most in practice.
The Council of State did not create a blanket exemption for pledges. It preserved, expressly, the notification obligation where the security package grants the creditor rights of prior approval — poteri di approvazione preventiva — over ordinary management decisions. The Court identified those rights, not default enforcement, as the real transfer of decisive influence.
That preservation catches a large proportion of UK-law covenant packages routinely used in Italian-law security documents. Consider the following standard covenant types that UK solicitors regularly negotiate into Italian acquisition finance term sheets.
A negative pledge — in the pure form, preventing the company from encumbering assets without lender consent — is likely safe. It restricts the pledgor but does not grant the creditor approval authority over how the business operates. The Council of State's reasoning focuses on positive governance rights rather than restrictions on the pledgor's freedom to deal with assets.
A material contract consent clause — requiring lender approval before the company enters into any commercial agreement above a defined threshold — is more problematic. If the threshold is set at a level that covers ordinary commercial activity (say, contracts above EUR 500,000 for a mid-cap financial-sector company), this is arguably a veto over ordinary management. That covenant, on the face of Cedacri, may trigger the creation-stage notification obligation even where the pledge itself would not.
A key-person approval right — requiring lender consent before the company dismisses or appoints its chief executive or chief financial officer — almost certainly triggers notification. Board composition is a core element of control under the Golden Power analysis. Granting a creditor veto over executive appointments is, functionally, granting decisive influence over the strategic direction of the company.
Unlike in most common-law jurisdictions, where lender covenants are treated primarily as credit-risk management tools and their regulatory implications are assessed separately (by the Prudential Regulation Authority, for example, in the context of change-of-control authorisation), Italian Golden Power analysis applies to the substance of the rights granted, not to their contractual label. A clause headed "information covenant" that in practice gives the lender a blocking right over a management decision may be characterised as a governance right for Golden Power purposes. UK solicitors reviewing Italian security packages must read each covenant for its functional effect, not its heading.
Regardless of whether creation required notification, enforcement always does.
The moment a creditor moves to enforce a pledge over shares in a strategic Italian company — whether through sale of the pledged shares, transfer of voting rights under a patto commissorio, or appointment of a receiver with voting authority — that event constitutes a change of control triggering prior Golden Power notification. This applies even if the original pledge was validly created without notification under the post-Cedacri rule.
The practical consequence for acquisition finance structures is a dual-stage obligation. At signing: analyse the covenant package clause by clause and notify if any covenant grants governance rights meeting the decisive-influence test. At enforcement: always notify, regardless of what happened at signing, and build a 45-day standstill into the enforcement mechanics. Creditors who do not build that standstill into their security agreement may find that a rushed enforcement — for example, in a distressed situation requiring a swift share sale — is challengeable as void.
D.L. 175/2025 introduced additional requirements specific to the financial sector, lowering the relevant ownership threshold for banking and insurance entities to 10% of share capital or voting rights. For lenders taking pledges over shares in Italian banks or insurance companies, the interaction between the Golden Power analysis and the prudential authorisation process required by the European Central Bank under Regulation (EU) 1024/2013 (the SSM Regulation) adds a further layer of timing risk: the two notification processes run in parallel but are not synchronised, and a Golden Power clearance obtained before ECB authorisation does not protect the transaction if the ECB subsequently objects.
The sectors covered by D.L. 21/2012 as amended are: defence and national security; energy; transport; electronic communications and broadband networks; critical infrastructure; critical technologies (artificial intelligence, robotics, semiconductors, cybersecurity); financial services including banking, insurance, and payment systems; healthcare and medical devices; food supply chains; and water management.
The financial sector deserves particular attention for acquisition finance structures. Cedacri itself was a financial-sector case, and D.L. 175/2025 has tightened the rules in that sector by setting a 10% minimum shareholding threshold that triggers notification obligations independently of whether the transaction confers control. A lender taking a pledge over 15% of the shares of an Italian bank is now in a mandatory notification position under the amended rules, even if the Cedacri analysis would otherwise have excluded the pledge from notification on governance grounds.
In our files, the most common mistake after a ruling of this kind is binary re-drafting: counsel either removes the Golden Power CP entirely, relying on Cedacri, or keeps it unchanged and treats the ruling as irrelevant. Both responses are wrong. The correct approach is a covenant-by-covenant review of the security package, a written assessment of which covenants arguably grant governance rights, and a decision — documented in the transaction file — about whether those covenants require a creation-stage notification. Where the position is genuinely uncertain (and the key-person covenant is genuinely uncertain), the cost of notification — roughly EUR 2,000 to EUR 5,000 in advisers' time for a standard filing — is far lower than the cost of a veto or a fine.
After Cedacri, can a UK lender take a pledge over shares in an Italian bank without filing a Golden Power notification?
It depends on the security package. If the pledge is a pure financial collateral arrangement with no governance covenants, Cedacri supports the position that creation-stage notification is not required. However, if the package includes key-person approval rights or material-contract consent thresholds covering ordinary business, those covenants may independently trigger the obligation. Enforcement always requires prior notification regardless of how the pledge was created.
How long does a Golden Power review take and can it block completion?
The review period is 45 calendar days from the date a complete notification is filed with the Presidency of the Council of Ministers. The government may extend by a further 25 days in complex cases. During the review period, the transaction cannot be completed. The government has the power to impose conditions, require structural remedies, or veto the transaction entirely. Timetabling a 45-day standstill into the CP mechanics is essential.
Does the Cedacri ruling apply to pledges over shares in Italian companies in sectors other than finance?
Yes. The Council of State's reasoning in Consiglio di Stato No. 9619 of 5 December 2025 is formulated as a general principle — decisive influence, not the legal form of the pledge, triggers notification — and applies across all sectors covered by the Golden Power regime. The financial sector is subject to additional rules under D.L. 175/2025, but the core Cedacri principle governs pledge creation analysis in defence, energy, transport, and all other covered sectors as well.
HREFLANG BLOCK:
Editorial Team — Panato Law Firm Staff
