Italy's government is facing its first major legal challenge over restrictions placed on Chinese shareholders in a strategic domestic company, as two entities linked to state-owned China National Tire & Rubber Corporation (CNRC) filed parallel appeals with the Lazio Administrative Regional Court (TAR) to overturn a decree that sharply curtails their influence over Pirelli & C. S.p.A. The lawsuits, filed by CNRC and its Italian investment vehicle Marco Polo International Italy S.r.l., target a Golden Power decree issued by the Council of Ministers on April 10, 2026 that caps Chinese board representation at three seats out of 15 and bars those directors from holding executive or committee leadership posts.
Why This Matters
• Investor precedent: The case will test whether Italy's expanded national security veto can withstand judicial scrutiny in commercially sensitive disputes.
• Board election unaffected: Pirelli's June 25 shareholder meeting to renew the board will proceed as scheduled, regardless of the pending litigation.
• Strategic sector protection: The restrictions were imposed to protect strategic industrial interests.
The Decree That Sparked the Fight
The April 10, 2026 decree—signed by Prime Minister Giorgia Meloni's government—represents one of the most explicit uses of Golden Power legislation in the industrial sector to date. Under the measure, Marco Polo, which holds a 34.1% stake in Pirelli (making it the largest single shareholder), can nominate only three directors to the 15-member board, down from eight previously. Two of those three must meet independence criteria. Critically, none of the three may serve as chairman, vice chairman, chief executive officer, or head any internal board committee.
The decree also prohibits Marco Polo from issuing strategic directives to Pirelli management or establishing organizational links between Pirelli and CNRC. Any share transfer by the Chinese entity must be cleared with the Ministry of Enterprise and Made in Italy (MIMIT), and sales to entities controlled by China's State-owned Assets Supervision and Administration Commission (SASAC) are explicitly barred. These conditions remain in force as long as Marco Polo's ownership exceeds 9.99% of Pirelli's capital.
Italy's Council of Ministers justified the intervention by citing national security and strategic industrial considerations, noting that significant foreign ownership in sensitive sectors carries regulatory implications requiring protective measures.
What This Means for Investors and Corporate Governance
For shareholders, especially foreign institutional investors with exposure to Italian equities, the Pirelli case offers a test of how aggressively Rome will deploy national security tools to reshape corporate control—even when no formal acquisition or change-of-control event is underway. The government's approach centers on strategic sector protection, but investors and legal observers have flagged questions about governance rights and regulatory predictability.
Pirelli, based in Milan, has addressed the matter carefully. The company stated it "reserves the right to intervene to protect its legal and economic position in the interest of the company and all its shareholders, including before all competent judicial authorities." That language leaves the door open for Pirelli to join the TAR proceedings if needed to clarify its own governance position.
The decree has reshaped Pirelli's control structure, ensuring that Camfin S.p.A.—the Italian investment vehicle led by Marco Tronchetti Provera—retains operational primacy despite holding 26.2% of shares, while the Chinese entity's voting influence is substantially constrained.
The June 25 Shareholder Meeting
Despite the litigation, Pirelli's annual shareholder meeting will convene on June 25, 2026 in Milan, with voting conducted through a designated representative. Two candidate lists have been submitted for the 2026–2028 board term:
• List 1 from Camfin and affiliates (26.2% combined stake) proposes candidates with Tronchetti Provera slated for chairman.
• List 2 from Marco Polo (34.1% stake) nominates three candidates under the decree's prescribed limit.
Under the current decree restrictions, Camfin's slate will fill the board majority, while Marco Polo's trio will occupy the minority allocation permitted by the April 2026 restrictions. The key question is whether the TAR will rule that the decree was procedurally sound or require adjustments to governance arrangements.
Legal Precedents and What Comes Next
Golden Power legislation, introduced in 2012 and expanded progressively through subsequent years, grants Rome veto authority over transactions in sectors spanning defense, energy, telecommunications, finance, critical infrastructure, artificial intelligence, robotics, and food security. The framework has been used dozens of times, but challenges in administrative court remain relatively infrequent.
The current appeals—filed by CNRC and Marco Polo—argue that the April decree requires judicial review. Sinochem has indicated concerns about the measures' impact on future investment climate. Legal observers expect the TAR to schedule hearings in the coming months, with substantive rulings likely to take considerable time.
Broader Implications for Italy's Industrial Policy
The Pirelli dispute highlights a broader tension in Italy's industrial strategy: balancing openness to foreign capital with safeguards for strategic sectors. Rome has signaled it will deploy intervention tools in sectors deemed sensitive, particularly when regulatory circumstances shift.
For companies operating in Italy—especially those in advanced sectors—the Pirelli case suggests that governance arrangements may be subject to reassessment if strategic considerations change. Legal advisers recommend foreign investors remain attentive to evolving regulatory frameworks and maintain clear communication with relevant authorities.
Whether the TAR rules on the appeal or upholds the government's authority, the case will establish important precedent for how Golden Power mechanisms function in practice—and whether Italy's courts will require specific justification for governance modifications undertaken in the name of national security.
