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International Corporate Governance

A Case Study Approach

Edited by Christine A. Mallin

Corporate governance has become a global phenomenon. This book highlights, through various case studies, how corporate governance has evolved in a number of countries around the world. The international cast of contributors, from varying professional backgrounds including academics, lawyers and company directors, focus on different regions around the globe, reflecting various ownership structures, legal systems, and political and cultural aspirations. Some of the case studies used include: Standard Life; Telecom Italia; and Eskom.
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Chapter 3: Strong Blockholders and Corporate Governance Structures that Improve Minority Shareholders’ Protection: The Case of Telecom Italia

Andrea Melis


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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