Chapter 3: Strong Blockholders and Corporate Governance Structures that Improve Minority Shareholders’ Protection: The Case of Telecom Italia
Andrea Melis INTRODUCTION In international taxonomies of corporate governance systems, the Italian corporate governance system has been classiﬁed within the so-called insiderdominated systems (Franks and Mayer 1995; La Porta et al. 1999). However, because of its own unique features, it does not entirely ﬁt into the international standard models (Melis 1999). Corporate governance regulation in Italy includes the so-called Draghi Reform (1998), the Preda Code (1999, updated in 2002), and the company law enforced in January 2004. The Draghi Reform (1998), which is legally binding for all listed companies, regulates the Italian ﬁnancial markets and corporate governance in listed companies, aiming to ‘strengthen investors’ protection and minority shareholders’, by regulating listed corporations on issues such as shareholders’ agreements, minority shareholders’ rights, internal controls, public bids, external auditors’ engagement, and the role of the board of statutory auditors as a monitor. It does not regulate the structure of the board of directors. The Preda Code (1999, 2002), a Cadbury-like voluntary code of best practice, focuses on the role of the board of directors, with a particular emphasis on its composition and method of appointment, as well as providing some recommendations on the role of the board of statutory auditors. The 2004 Company Act, inter alia, allows Italian listed companies to choose between a British-like unitary board structure (with an audit committee, entirely composed of independent directors, appointed by the board of directors, within the board), a two-tier board structure (with a management committee and a supervisory council, without mandatory labour...
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