Italy to change contested legislation on corporate governance rules
Adds details and background
By Giuseppe Fonte
ROME, Oct 8 (Reuters) -Italy intends to change part of acontested law on corporate governance rules that has triggered criticism from asset managers and financial companies, Economy Minister Giancarlo Giorgetti said on Tuesday.
The bill,approved by parliament this year, changed conditions under which a company's outgoing board presents a list of candidates for the next term, a practice common abroad that in recent years has been adopted by leading Italian companies including insurer Generali GASI.MI.
"There will be a correction," Giorgetti told a parliamentary panel in answer to lawmakers' questions.
Under the legislation, the outgoing board's list needs approval by at least two-thirds of directors, something which critics say could give established shareholders veto powers and potentially make companies unmanageable.
The voting process takes place in two stages, as the bill introduces a second ballot on individual candidates. This is deemed an unnecessary complication by large professional investors.
A further measure requiring board lists to include 30% more candidates than will be elected, is also contentious. Headhunters point out that nominees need to agree to be included even knowing not all of them can get picked.
The government has defended the measure by saying that it wanted to curb the practice of directors getting re-appointed indefinitely, with little regard to shareholders' wishes.
"We intervened to correct a market distortion, we will not make mistakes in a diametrically opposite direction," Giorgetti said.
As things stand, the new rules become effective in 2025 and companies including Generali, whose board comes up for renewal next year, will have to amend their bylaws by then to comply.
Giorgetti added some criticisms and doubts raised by the financial industry "can be shared" while others were less justified, without giving further details.
The controversial legislation was championed by businessman Francesco Gaetano Caltagirone, an investor in Generali who has repeatedly complained about the influence that Mediobanca MDBI.MI exerted on the insurer.
Some institutional investors also complain about a provision in the law giving companies the option to stop investors from attending shareholder meetings in person by holding them behind closed doors, with only an investor representative allowed in.
Reporting by Giuseppe Fonte, editing by Gavin Jones
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