AC Milan are free to compete in the Europa League this season after the Court of Arbitration for Sport (CAS) upheld the Italian club’s appeal against a two-year ban from Europe.

UEFA excluded the Rossoneri from its competitions for the 2018-19 and 2019-20 campaigns after they were found guilty of breaching the governing body’s licensing and financial fair play regulations.

Milan – now controlled by United States hedge fund Elliott – took an appeal to CAS, and on Friday a panel restored the seven-time European champions’ ability to contest continental honours.

In a statement published on tas-cas.org, the quasi-judicial body noted that the financial situation at San Siro had “significantly improved following the recent change of ownership”.

It rejected Milan’s request to order UEFA to enter into a settlement agreement but did ask European football’s governing body to “issue a proportionate disciplinary measure”, stating that “some important elements have not been properly assessed by the adjudicatory chamber”.

Milan were originally referred to UEFA’s club financial control body last month having sustained losses for several years.

The club, who qualified for the Europa League by virtue of a sixth-placed finish in Serie A last term, argued their finances were stable following a takeover by Li Yonghong last year, but UEFA took action.

Milan chairman Marco Fassone and director of sport Massimiliano Mirabelli spent the summer of 2017 on a recruitment drive, spending more than 200 million euros on the likes of Leonardo Bonucci, Hakan Calhanoglu and Andre Silva.

Their predicament prior to the intervention of CAS had led to speculation that prize assets including Italy defender Bonucci and young goalkeeper Gianluigi Donnarumma could be sold to balance the books.

Fiorentina, who finished eighth in the Italian top flight last season, had stood to benefit from their rivals’ exclusion from the Europa League. Seventh-placed Atalanta retain their qualifying spot.