Pirelli published the long prescription list adopted by the Government on 16 June with the activation of special powers (Golden Power). The tire manufacturer announced this in a note on June 18. Prescriptions, which must be complied with by the Chinese shareholder, in order "to prepare a network of measures operating overall to protect the independence of Pirelli and its management, as well as to protect the technologies and information of strategic importance owned by the company".
Pirelli recalled that the so-called "Golden Power Process" had been initiated in relation to the renewal of the shareholder agreement signed on May 16, 2022 by China National Tire & Rubber Corporation (Cnrc), Marco Polo International Italy, Camfin and Marco Tronchetti Provera & C.
The Council of Ministers, explains the group led by Marco Tronchetti Provera, "in adopting the provision, considered, among other things, that the relevant technology for the purposes of decree 21/2012 it represents a part of the economic activity of Pirelli ei risks connected to it require structural safeguards that disregard the temporariness of the shareholders' agreement, as well as that any change to Pirelli's corporate governance, including the non-renewal or stipulation of the shareholders' agreement, must be notified pursuant to the Golden Power decree".
The prescriptions
The provision ordered the imposition of "specific requirements" against CNRC and requires Chinese shareholders to:
1) comply with the commitment not to exercise management and coordination activities as detailed below, by way of example and not limited to:
- ensure full autonomy to Pirelli regarding the management of relations with customers and suppliers;
- ensure that Pirelli autonomously prepares the Company's and Group's strategic, industrial, financial and/or budget plans;
- ensure that Pirelli is not subject to instructions from the Sinochem Group;
- not to adopt any deeds, resolutions or communications which may give the impression that Pirelli's decisions are the result of a compulsory and imperative will by Cnrc;
- not centralize treasury services or other financial assistance or coordination functions (e.g. cash pooling) or other technical coordination functions (e.g. integration of Pirelli IT systems into those of Sinochem Holdings Corporation Ltd., including those of the Chinese subsidiaries of Pirelli);
- not issue directives or instructions, and in any case not to coordinate the initiatives concerning decisions on financial and credit matters and on Pirelli research and development;
- not to issue directives regarding the carrying out of extraordinary operations by Pirelli, such as, for example, quotations of financial instruments, acquisitions, disposals, concentrations, transfers, mergers, demergers, etc.;
- not adopt decisive decisions regarding Pirelli's operating strategies or formulate group strategic directives;
- guarantee the absence of organizational-functional connections between Pirelli on one side and CNRC on the other;
2) undertake to ensure that the managing director of Pirelli, taken from the majority list, is indicated by Camfin and that, consequently, out of 12 directors of Pirelli, taken from the majority list, 4 are designated by Camfin;
3) undertake to ensure that, by analogy with the agreement signed on 1 August 2019, the office of direttore generaledelegate the power to implement the business plan, budget and ordinary management of Pirelli;
4) undertake to ensure that all the delegated bodies of Pirelli are identified exclusively among the directors designated by Camfin;
5) commit to ensure that the power of appointment and revocation of the directors and deputy directors of Pirelli is referred, pursuant to article 11.9 of the Articles of Association of Pirelli, to the executive vice president or the chief executive officer;
6) undertake, jointly with Pirelli, to ensure that the statute is amended in such a way that, in relation to board resolutions relating to assets of strategic importance as well as the appointment and dismissal from the office of executives with strategic responsibilities (key managers of Pirelli), the proposal is reserved to the Chief Executive Officer and any decision contrary to the same can be adopted only with the vote of at least 4/5 of the Board of Directors.
The prescriptions against Pirelli
Furthermore, the imposition of "specific prescriptions" against Pirelli was ordered:
1) ensure that the articles of association are amended in such a way that, in relation to the board resolutions relating to assets of strategic importance as identified above as well as the appointment and removal from the office of executives with strategic responsibilities (key managers of Pirelli), the proposal is reserved to the managing director and any decision contrary to the same can be adopted only with the vote of at least 4/5 of the Board of Directors.
2) to refuse any request that goes beyond the normal exercise of the shareholders' prerogatives as well as to implement any managerial or organizational initiative that comes from subjects attributable to the Chinese State-owned Assets Supervision and Administration Commission of the State Council (Sasac), with particular reference to requests concerning:
- la sharing of information referring to technologies covered by industrial property rights, intellectual property or, in any case, any information relating to the know-how attributable to such technologies, even if under development;
- the centralized treasury mechanism managed by Sinochem Holding Corporation Ltd.;
- direct access to Informative system management and administration, including the Enterprise Resource Planning (ERP) platforms of Pirelli & CSpa and its subsidiaries, including the Chinese branches;
- il transfer of ICT goods, systems and services of the Pirelli group companies at infrastructures located outside the territory in which European jurisdiction applies and/or managed by subjects attributable to the Chinese government;
- the transfer or sharing with subjects attributable to the Chinese Government of any data collected or processed through Cyber technology.
The organizational unit for safety
“The provision with which the Presidency of the Council of Ministers exercised special powers – concludes the note – provides Pirelli with a series of tools for the protection of assets of strategic importance, including a industrial security clearance strategy that provides for limits on the accessibility of information. The Pirelli company will also have to set up a autonomous organizational unit for security. The implementation of the prescriptions will be monitored by the Ministry of Business and Made in Italy. Pirelli is required to send the Ministry within 30 days of the approval of the financial statements, starting from that referring to the year 2023, a report drawn up by the Board of Statutory Auditors, which communicates the measures adopted in compliance with the decisions taken with the Provision and any other corporate or business measures relevant to them". And again that the next CDM “will take note of the aforementioned provisions and will proceed to convene one new assembly for the renewal of the administrative body and for the preparatory works for the statutory amendments prescribed by the provision”.
