Since 15 December 2016, highly dilutive rights issues carried out by Italian issuers whose shares are listed on Borsa Italiana’s regulated markets have been managed according to a new procedure known as the rolling model.

The adoption of the rolling model was promoted by Consob, following several consultations, in order to prevent price anomalies affecting the shares concerned during highly dilutive rights issues. Such price anomalies had occurred in all major highly dilutive transactions carried out between 2009 and 2016, including, for example, the transactions carried out by Saipem S.p.A. in January 2016, by Banca MPS S.p.A. in 2015 and 2014, by Fondiaria-Sai S.p.A. in 2012, and by Seat PG S.p.A. and Tiscali S.p.A. in 2009.

In summary, the model provides for the following steps:

  1. within two trading days before the start of the capital increase, the listed company announces the final terms of the transaction to the public;
  2. Borsa Italiana verifies, on the basis of objective criteria established by Consob and set out in the Rules of the Markets organised and managed by Borsa Italiana, whether the capital increase is to be considered highly dilutive;
  3. if the verification is positive, Borsa Italiana publishes a Notice informing the market that the transaction will be managed according to the rolling model; if the verification is negative, the transaction is managed according to the traditional model, that is, the non-rolling model;
  4. before the start of the highly dilutive capital increase, Consob publishes a specific Warning on its website, announcing to the market the imminent launch of the capital increase managed according to the rolling model;
  5. once the capital increase has started, subscription rights may be exercised in advance on each day of the capital increase starting from the third day, with the newly issued shares being made immediately available; the exercise must take place in accordance with the procedures and within the time limits laid down in the Instructions for the Centralised Administration Services of Monte Titoli and under the contractual conditions agreed with the investor’s intermediary on a case-by-case basis;
  6. this early delivery of the newly issued shares is intended to allow arbitrage between shares and subscription rights from the first day of the capital increase, as indicated in Consob Communication No. 88305 of 5 October 2016; in turn, arbitrage activity helps to prevent price anomalies from arising;
  7. alternatively, subscription rights may be exercised according to the traditional model, with delivery of the newly issued shares at the end of the capital increase.

The model applies only to capital increases involving the issue of subscription rights. Other types of capital increases, for example through convertible bonds or without the issue of subscription rights, are not managed according to the rolling model.

It should also be noted that the rolling model may have an impact on the right of withdrawal provided for under Article 95-bis, paragraph 2, of the Italian Consolidated Law on Finance; see Consob Communication No. 88305 of 5 October 2016.

Recent highly dilutive rights issues:

The following documents provide further details on the rolling model:

For any questions on the operation of the rolling model, please contact Consob - Markets Division - Post-Trading Office at post-trading@consob.it.