Italy is known for its exquisite food, wonderful monuments and sleek design. But it is not known for its corporate governance and even less so for the quality of its laws protecting minority investors. Controlling shareholders enjoy large benefits from their position. For this reason, it is particularly interesting to follow a corporate legal experiment taking place in Italy.
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.
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