Introduction
For international venture capital investors, private equity funds, and foreign startups looking to the Italian tech ecosystem, understanding the FDI Screening (Foreign Direct Investment) regime and the regulations on Golden Power (Decree Law 21/2012 and subsequent amendments) is now an essential requirement for strategy and governance.
The recent ruling by the Council of State (Consiglio di Stato) Section IV, March 16, 2026, No. 2180/2026 upheld the Italian government’s veto of the joint venture between the Italian aerospace startup Manta Aircraft S.r.l. and the Chinese state-owned group Shenyang Aviation Industry Group (SAIG).
The decision provides a very clear picture of how Italian and European authorities assess the protection of technological assets, sending a crucial signal to the global venture capital market.
Case analysis: Manta Aircraft’s profile and the proposed joint venture
Manta Aircraft represented the classic profile of an deep-tech startup in the early stage:
- structure: zero employees, no industrial production underway, no registered patents, and no operationally built physical prototype
- key asset: the founders’ technical and scientific know-how and the design registration for a hybrid-electric vertical takeoff and landing (VTOL) aircraft (“ANN Plus”) for regional passenger transport in China
- structure of the transaction: A Memorandum of Cooperation for the establishment of a joint venture in China (51% SAIG, 49% Manta Aircraft), with a board of directors having a Chinese majority (4 out of 7 members). Manta would have contributed only its technical know-how, while SAIG would have provided 25 million euros and engineering resources.
Despite the preliminary opinion of the Ministerial Coordination Group (favorable with conditions), the Italian government exercised an absolute veto on October 29, 2024. Manta’s appeal was dismissed by the Lazio Regional Administrative Court (Judgment No. 11160/2025) and ultimately rejected by the Council of State.
The 4 Key Principles for the International Market
What are the key practical aspects of this ruling that every private equity and venture capital professional needs to be aware of?
1. The early-stage phase and intangible know-how do not provide immunity
For foreign investors who acquire shares or enter into partnerships with Italian pre-seed or seed startups, the ruling establishes a fundamental principle: the absence of issued patents or commercial revenue does not preclude the company’s strategic significance. Technical and scientific know-how in the development phase is, in and of itself, a strategic asset worthy of protection.
2. The test of potential reversibility (Dual-Use)
It is not sufficient for the startup and the investor to document an exclusively civilian intended use (e.g., passenger transport). Under Italian case law, it is sufficient that military or defense use is not “a priori impossible”. The risk to national security is assessed on a potential and prospective basis.
3. The extension of the “Golden Power” to “outbound” transactions
Italian legislation on FDI screening not only screens incoming (inbound) foreign investments but also directly intercepts outgoing (outbound) transactions. When an Italian entity transfers ownership, control, or title to know-how and intellectual property to foreign corporate entities (especially those outside the EU), the government’s jurisdiction is triggered.
4. The limits of the “territoriality” of Government requirements
The Council of State justified the legality of the veto (regarding an authorization conditional on certain requirements) by pointing out that imposing confidentiality obligations, restrictions on use, or prohibitions on sublicensing on a joint venture (JV) based in a non-EU country under foreign law makes compliance with the requirements “extremely difficult, if not de facto impossible.”
The Legal Nook Insights: operating business focus for startups, funds and advisers
From theory to practical negotiation. In this section, we bring together brief practical tips, case-study, guidance and strategic insights drawn from our experience in the field. Practical tools to help you navigate the complexities of the law and protect the value of your property investments.
- Golden Power assessment from day 1 (structuring phase): the analysis of the strategic scope cannot be postponed until closing or the final due diligence phase, but must guide the structure of the agreement (particularly with non-EU partners)
- valuation of intangibleassets: the size of the company and its stage of development (seed or pre-seed) offer no protection. What matters is the nature of the technology and the sector in which it is used.
- analysis of potential reversibility (dual-use): the commercial intended use defined in business plans is not sufficient; it is necessary to analyse what the technology could do if redesigned or reused in military contexts
- attention to outbound joint ventures and licensing: transfers of intellectual property, licensing agreements and co-development joint ventures with non-EU countries are fully subject to the power of veto
- feasibility of regulatory requirements: if the proposed corporate structure makes it impossible for the Italian authorities to monitor or enforce the requirements, the risk of an outright veto becomes extremely high. The same applies to the nationality of the foreign partner
- prospective technological stress test: emerging technologies must be analysed not only for what they do today, but for what they might be capable of doing in the military sphere in the future.
