Mediobanca CEO, Alberto Nagel, has called for revisions to Italy’s capital markets legislation, citing concerns over the feasibility of certain provisions. Nagel’s remarks come as the Italian government seeks to implement measures aimed at revitalizing the Milan stock exchange and attracting companies back to the market.
Challenges with Proposed Measures
One of the key aspects of the bill under scrutiny is the provision granting investors greater influence over the selection of candidates for a company’s board of directors. While this practice is common in other countries, such as the United States, Nagel argues that its implementation in Italy may prove challenging or require significant adjustments to be enforceable.
Concerns from Financial Industry
Representatives from investment funds and Italy’s financial sector have echoed Nagel’s sentiments
expressing apprehensions about the potential consequences of measures that amplify the power of major shareholders in listed companies. There are fears that such measures could deter foreign investment and undermine efforts to attract companies to the Milan stock exchange.
Ambiguities in the Legislation
Critics of the bill also point to ambiguities in its language, particularly regarding the process for selecting board candidates. The requirement for board-approved candidate lists to secure at least two-thirds of director approval raises concerns about potential veto powers held by minority shareholders. Additionally, uncertainties surround the mechanics of a second vote on individual candidates, creating further confusion among stakeholders.
Implications for Corporate Governance
The proposed changes to Italy’s capital markets legislation have implications for corporate governance practices in the country. While some leading Italian companies, including Mediobanca CEO, Generali, and UniCredit
have already adopted the practice of presenting board candidate lists, the new bill seeks to formalize and expand this approach. However, concerns remain about the practicality and effectiveness of these measures in ensuring transparent and accountable corporate governance.
Response from Business Community
Businessman Francesco Gaetano Caltagirone has been a vocal proponent of the proposed reforms
advocating for greater shareholder participation in board appointments. However, concerns have been raised by industry leaders
including Generali Chief Executive Philippe Donnet, who cautioned that the legislation could make large listed groups unmanageable.
Timeline for Implementation
Despite the reservations expressed by stakeholders, the capital markets bill has already been approved by the lower house of parliament. It is expected to undergo further scrutiny in the upper house before becoming law. The new rules are slated to come into effect in 2025, requiring companies to adjust their bylaws accordingly.
In conclusion, the debate surrounding Italy’s capital markets bill underscores the complexities of reforming corporate governance practices to enhance investor participation and market competitiveness. While the objectives of the legislation are laudable, addressing concerns raised by industry stakeholders will be crucial to ensuring its successful implementation.