ROME (Reuters) – Italy’s upper house of parliament gave final approval on Tuesday to legislation that aims to overhaul the country’s capital markets and includes measures to boost the influence of listed companies’ top investors.
The bill aims to attract newcomers to Borsa Italiana, after the Milan stock exchange lost a string of prominent companies in recent years to other markets and buyouts.
Representatives of investment funds and Italy’s financial industry, however, have all voiced concerns that the scheme could backfire and discourage foreign investments.
One provision allows listed companies to issue shares that boost up to 10-fold the voting rights of longstanding investors, as Italy seeks to stem relocations to the Netherlands, where corporate governance rules help established shareholders keep a tight grip on companies.
That provision has angered asset managers, including large foreign funds, which favour a “one share, one vote” rule that prevents a concentration of power in the hands of a few.
The bill also gives investors a bigger say over the conditions under which a company’s outgoing board presents a list of candidates for the next term. Under the bill, the board’s list of candidates will need approval by at least two-thirds of directors, which critics say could give minority shareholders veto power.
In addition, the bill provides for a second vote on individual candidates once the board’s list wins sufficient votes by shareholders to be chosen, a measure that professional investors see as an unnecessary complication.
Lawyers argue the bill is ambiguous because it is not clear whether all shareholders can participate in the second ballot or only those who took part in the first one, or even only those who voted for the list of board candidates that got the most votes.
The government this month pledged to consider amending the measure on the board list as well as other parts of the bill later this year.
(Reporting by Giuseppe Fonte; Editing by Leslie Adler)
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