Italy, plagued by a series of high-profile departures of major corporations relocating their listings and headquarters abroad, is making a bold move to reverse the trend. The Italian government is on the verge of approving a long-awaited package of measures aimed at revitalizing its capital market, catering to local businesses’ needs.
The proposed measures include streamlined listing requirements and the option for companies to issue shares with significantly enhanced multiple voting rights. These actions follow warnings from the OECD in 2020 regarding the need to improve Italy’s capital markets to stimulate economic growth.
However, a twist in the tale has emerged, with politicians from the ruling coalition introducing intricate amendments to the regulations. These amendments seek to alter the process of appointing directors at listed companies, intending to grant minority investors more influence over board decisions.
If approved, these changes could curtail the board’s ability to renominate directors significantly. One amendment stipulates that if a single investor owns more than 9% of a company and nominates directors, the board cannot present a slate of candidates. Another amendment boosts a second slate’s influence if it obtains at least 20% of the votes, granting it half of the board seats minus one, in the event the board’s slate wins the majority.
Notably, companies such as UniCredit, Telecom Italia, Mediobanca, and Generali may be affected by these potential rule changes. Critics argue that these amendments could create unnecessary turbulence for foreign investors, just weeks after the controversial banks windfall tax rattled Italian banking shares.
While some support the proposed changes in governance, others believe they could hand excessive power to boards of directors. Critics, like Francesco Gaetano Caltagirone, founder of a leading building group, advocate for allowing investors to vote on individual board candidates rather than as a whole slate.
With corporate battles looming, particularly in the case of Mediobanca and Generali, where key stakeholders are jockeying for influence, the proposed amendments hold significant implications. While proponents see these changes as timely, some experts argue they might deter international investors and complicate Italy’s efforts to create a more investor-friendly environment.
Photo Source: Google
By: Delino Gayweh
Serrari Financial Analyst
21st September, 2023
