Italy: Minority shareholder protection

Earlier this month, the Financial Times published an article by Luigi Zingales which considered recent changes in Italian law concerning the appointment of directors to public company boards. Zingales observed:

"To protect minority shareholders, a 2005 law made it mandatory for all publicly traded companies to reserve some board seats for lists not related to the controlling shareholder. This is a stronger version of a Securities and Exchange Commission proposal that would require US companies to include shareholder-nominated candidates for the board in the proxy voting material (so-called shareholders' access to proxy). Opponents of this reform in the US have argued that such access will transform corporate boards into small parliaments, where majority and minority will fight to the detriment of companies. The Italian experiment provides a powerful test of this conjecture. Given the legendary passion of Italians for politicking, if there were any merit to this concern, we would certainly see it in spades in Italian boards. While it is too early to draw a definite conclusion, the evidence so far is very encouraging. From the outside there seems to be no sign of politicking. Furthermore, my personal inside experience, as an appointee of minority shareholders on the Telecom Italia board, confirms this impression. We have had disagreements, but these were not ideological conflicts between majority and minority".

[Click here and here for an overview (in English) of the legislative changes].