Italian Economy, time to assess the governance of listed companies
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Sitting on a Board of Directors today, more than in the past, involves taking on an increasing level of responsibility and significant personal risks. A new era is emerging, quite different from the previous one, imposing new responsibilities on independent directors. We are talking about a new law, Law 05/03/24-n. 21, which includes measures to support capital competitiveness, along with a specific mandate to the Government for an organic reform of the regulations on capital markets. Among the most important and debated new elements is the change to the multiple-vote rule in the election of directors.
Board Composition and the Role of Company Owners
The composition of a board reflects the company’s financial and economic sensitivity to the outside world. Often, restrictions and vetoes on appointments come from the owners themselves who, in their strong desire to control their creations, often push away the most critical but also most open and objective individuals concerning market realities. In Italy, the NED (Association of Independent Directors) has been able to confirm a marked evolution in governance, particularly on the eve of the reform of the TUF (Financial Services Act). Close attention is now given to the provisions of the delegation law on capital markets and the contents of the self-regulation codes. Not surprisingly, there is a steady increase in the number of independent directors in various boards, rising from 43% in 2013 to 51% in 2023 for small listed companies, over 60% for major companies, and over 68% for financial sector companies.
Comparison with the U.S. Model
In the U.S. market, particularly within the Nasdaq, funds such as Blackrock and Vanguard follow an unwritten “creed,” resulting in 85% of board members being independent directors. The presence of these independent directors has enhanced board competencies, increasing the diversity of general interests represented. However, this often stands in opposition to the wishes of ownership and controlling shareholders. In Italy, for example, it is evident that without the active presence of independent directors, Orcel’s arrival at Unicredit would have been slower and more complicated.
Implications of the Reform for Italian Companies
The reform underway in national boards, navigating between old traditions and new legal obligations, increasingly reinforces the professional and ethical standards required of independent directors, positioning them as representatives of general interests and carriers of higher expertise. Furthermore, the effectiveness of the list voting system is under discussion, due to potential obstacles it may pose. Between 2013 and 2023, this issue has been a factor in the migration of many Italian corporations to foreign exchanges, resulting in an exit value of about 70 billion euros in market capitalization; today, now non-Italian companies, they have seen their value grow beyond 200 billion euros.
Fabio Accinelli
Board Composition and the Role of Company Owners
The composition of a board reflects the company’s financial and economic sensitivity to the outside world. Often, restrictions and vetoes on appointments come from the owners themselves who, in their strong desire to control their creations, often push away the most critical but also most open and objective individuals concerning market realities. In Italy, the NED (Association of Independent Directors) has been able to confirm a marked evolution in governance, particularly on the eve of the reform of the TUF (Financial Services Act). Close attention is now given to the provisions of the delegation law on capital markets and the contents of the self-regulation codes. Not surprisingly, there is a steady increase in the number of independent directors in various boards, rising from 43% in 2013 to 51% in 2023 for small listed companies, over 60% for major companies, and over 68% for financial sector companies.
Comparison with the U.S. Model
In the U.S. market, particularly within the Nasdaq, funds such as Blackrock and Vanguard follow an unwritten “creed,” resulting in 85% of board members being independent directors. The presence of these independent directors has enhanced board competencies, increasing the diversity of general interests represented. However, this often stands in opposition to the wishes of ownership and controlling shareholders. In Italy, for example, it is evident that without the active presence of independent directors, Orcel’s arrival at Unicredit would have been slower and more complicated.
Implications of the Reform for Italian Companies
The reform underway in national boards, navigating between old traditions and new legal obligations, increasingly reinforces the professional and ethical standards required of independent directors, positioning them as representatives of general interests and carriers of higher expertise. Furthermore, the effectiveness of the list voting system is under discussion, due to potential obstacles it may pose. Between 2013 and 2023, this issue has been a factor in the migration of many Italian corporations to foreign exchanges, resulting in an exit value of about 70 billion euros in market capitalization; today, now non-Italian companies, they have seen their value grow beyond 200 billion euros.
Fabio Accinelli