Following on from a public statement issued last week by a group of leading Italian academics and legal experts, international institutional investors and their trade associations have been invited to add their voice to a call for the Italian Ministry of Finance to roll back a highly criticized legal measure that would strip longstanding investor protections and enable the introduction of multiple voting rights at Italian listed companies.  As highlighted in our 28th July 2014 post “A poison pill by any other name would taste as bitter” the so-called Development Decree significantly dilutes minority shareholders, with international shareholders in pooled nominee accounts disproportionately impacted.

Now, in an unprecedented intervention, noted international corporate governance contributors including Luca Enriques, Luigi Zingales  and Karina Litvack (formerly head of Governance at F&C Asset Management) have added their voice to concerns raised by investors through their trade association. Assogestioni. The involvement of non-executive directors of Italian companies is as interesting as it is unusual. Normally corporate governance lobbying is undertaken through the issuer lobby groups. The willingness of the 48 to speak out highlights a strong core of reform-minded INEDs on Italian company boards prepared to take a clear public stance on this issue. The group is now seeking further support from global shareholders in order to send an unambiguous signal to the Italian Parliament that safeguarding minority investor protections is critical to Italy’s economic health. If the Italian government continued with the proposals, the change would have a material impact on the investment risk profile would likely see investors avoid the market.

The letter comes at a difficult time for Italian corporate governance.  The majority of corporate funding in many parts of Europe has been bank and debt-based with little impact on voting rights. However, as the EU attempts to steer investment towards equity, the consequential loss of control through the AGM would see old power structures undercut. The rapporteur for the Committee on Legal Affair of the European Parliament,  Sergio Cofferati, recently tabled a series of amendments to the Shareholder Rights Directive which would, if accepted, enshrine multiple voting rights in the European regulatory landscape as a means of promoting long-term share ownership. In reality, because of the complexities of legal ownership structures (as highlighted throughout this blog), foreign shareholders are simply not able to fulfill their role as stewards, thereby ceding control to the majority owners.

This is the second mass academic intervention in the corporate governance debate in January 2015 alone. In the US, Professor Lucian Bebchuk was the target of criticism from sitting  SEC Commissioner Daniel Gallagher for his role in supporting majority voting. In Professor Bebchuk’s defense, 34 academics wrote in protest that the Commissioner had overstepped his authority and requested he withdraw his allegations.

Since the financial crisis and the subsequent regulatory reform proposals there have been significant efforts to “chill” the corporate governance debate. The spontaneous involvement of non-aligned academics adds much-needed balance and should be welcomed.

Investors or other parties interested in co-signing the letter can find out more about the initiative from Karina Litvack directly. To find our more, please contact Manifest on 44 1376 503500 or by email info [at] manifest [dot] co [dot] uk and we will pass the details on.


Dear Sirs,

On behalf of the undersigned international investment institutions, investor trade associations and concerned individuals, we wish to convey our concerns regarding current parliamentary discussions surrounding the potential introduction of multiple voting rights at Italian listed companies. We also take this opportunity to note the parallel position statement issued by Assogestioni (,147,10681,49,html/voto-maggiorato-e-voto-plurimo-un-vulnus-al-principio-di-one-share-one-vote), and submit the following statement with a view to highlighting our shared objectives on this important matter.


Last June, the Growth Decree introduced by the Italian government in 2014 to reform and restart the economy added a provision that gained scant international notice, but raises serious concerns for minority investors: it enabled listed companies to grant double voting rights to shareholders that have owned their shares for at least two years. These so-called loyalty shares were intended to discourage short-termism by rewarding long-term holders. In fact, however, the experience of France, which has had a type of loyalty shares for years, has demonstrated that it is almost exclusively controlling shareholders that take advantage of this option, by doubling their voting weight at shareholder meetings and effectively preserving their control while halving their economic exposure. For this reason, minority shareholders, i.e. institutional investors, are strongly opposed to loyalty shares. They have an opportunity to take action this week to prevent the Italian government from enshrining them in law by insisting that an exceptional provision to ease their introduction by listed companies be allowed to sunset on January 31st as originally promised.

Under Italian law, a two-thirds majority vote at a special meeting is required for the introduction of loyalty shares. However, a provision inserted last July by the Italian Parliament allowed for such resolutions to pass by a simple majority – which, given low voter turnout, gives a clear advantage to controlling shareholders and makes it much harder for minority investors to block the adoption of rules that erode their fundamental rights to equitable treatment.

While the amendment is currently intended to sunset by January 31st, according to recent press reports, the Government is under pressure to renew it, in the hope of easing the approval of multiple voting rights proposals at the next wave of annual meetings in Italy this spring.

The two-thirds majority requirement for special meeting resolutions was among the most effective innovations of the Draghi Law of 1998: in one simple step, Italy met the best international standards in protecting minorities from the risk that the majority holder unilaterally alter shareholders’ rights. Consequently, lowering the quorum required for passing a decision as important as introducing loyalty shares seriously harms minority investors’ interests. Three Italian companies (Astaldi, Campari, and Amplifon), all with majority shareholders, have convened meetings this month to take advantage of the lower quorum. With double voting rights, their controlling shareholders will, in effect, gain perpetual control of special meetings, a de facto repeal of the protection that minority shareholders have enjoyed for nearly twenty years: assuming dominant shareholders will be the only ones to double their vote, they will make up two-thirds of the votes in the general meeting, enough to pass any resolution unilaterally.


It is regrettable that the Italian Government and Parliament introduced the exception to the two-thirds majority requirement last summer, but now is an opportunity to rectify the situation by allowing the sunset clause set for January 31st to take effect as originally intended. To extend it would send a negative signal to institutional investors, both domestic and international, and damage Italy’s attractiveness as a destination for the investment capital the country needs. Institutional investors must, as in all other developed capital markets, retain their collective veto power on fundamental aspects of the life of controlled companies. They must also be able to continue to rely on the protections long afforded by law that are essential to enable transparent and accountable corporate practice.

We therefore urge the Italian Government and Parliament to disallow the temporary extension of the lower quorum for the introduction of loyalty shares and demonstrate their commitment to the fair treatment for all investors which in turn can help encourage the flow of investments into the Italian stock market and broaden the ability of Italian companies to access sources of finance other than bank loans. The credibility and attractiveness of the Italian stock market depend on their clear and unambiguous support for fair treatment of minority investors, in line with Italian law.


  1. Alberto Alesina, Harvard University
  2. Angelo Baglioni, Catholic University of Milan
  3. Francesco Bartolucci, University of Perugia
  4. Alberto Bisin, New York University
  5. Tito Boeri, Bocconi University
  6. Andrea Boitani, Catholic University of Milan and Supervisory Board Member, Banca Popolare di Milano
  7. Massimo Bordignon, Catholic University of Milan
  8. Sabrina Bruno, University of Calabria and Non-Executive Director, SNAM S.p.A.
  9. Lucia Calvosa, University of Pisa and Non-Executive Director, Telecom Italia S.p.A.
  10. Francesca Cornelli, London Business School and Non-Executive Director, Telecom Italia S.p.A. and Cofide S.p.A.
  11. Renzo Costi, University of Bologna
  12. Valentino Dardanoni, University of Palermo
  13. Francesco Daveri, University of Parma
  14. Franco Debenedetti, Istituto Bruno Leoni and Non-Executive Director, CIR S.p.A. and Piaggio S.p.A.
  15. Alessandro De Nicola, Adam Smith Society and Non-Executive Director, Finmeccanica S.p.A. and Amundi SGR
  16. Daniela Del Boca, Collegio Carlo Alberto
  17. Francesco Denozza, University of Milan
  18. Luca Enriques, University of Oxford
  19. Mara Faccio, Purdue University
  20. Carlo Favero, Bocconi University
  21. Mario Forni, University of Modena and Reggio Emilia
  22. Dario Frigerio, Non-Executive Director, Finmeccanica S.p.A., Poste Vita S.p.A., and Sogefi S.p.A.
  23. Marzio Galeotti, University of Milan
  24. Pietro Garibaldi, University of Turin
  25. Federico Ghezzi, Bocconi University
  26. Francesco Giavazzi, Bocconi University
  27. Luigi Guiso, Einaudi Institute for Economics and Finance
  28. Tullio Jappelli, University of Naples Federico II
  29. Francesco Lippi, Einaudi Institute for Economics and Finance
  30. Karina Litvack, Non-Executive Director, Eni S.p.A.
  31. Alberto Mazzoni, Catholic University of Milan
  32. Enrico Moretti, University of California Berkeley
  33. Marco Onado, Bocconi University
  34. Alessio M. Pacces, Erasmus University Rotterdam
  35. Marco Pagano, University of Naples Federico II
  36. Fausto Panunzi, Bocconi University
  37. Alessandro Penati, Quaestio Capital Management SGR
  38. Franco Peracchi, University of Rome Tor Vergata
  39. Michele Polo, Bocconi University
  40. Paola Sapienza, Northwestern University and Non-Executive Director, Assicurazioni Generali S.p.A.
  41. Carlo Scarpa, University of Brescia
  42. Fabiano Schivardi, Bocconi University
  43. Lorenzo Stanghellini, University of Florence
  44. Mario Stella Richter, University of Rome Tor Vergata
  45. Guido Tabellini, Bocconi University
  46. Francesco Vella, University of Bologna
  47. Paolo Zaffaroni, Imperial College
  48. Luigi Zingales, Harvard University and Non-Executive Director, Eni S.p.A.

All signatories support this petition in a strictly personal capacity.

The appeal is addressed to:

Al Presidente del Consiglio dei Ministri
Dott. Matteo Renzi
Palazzo Chigi – Piazza Colonna 370
00187 Roma – Italy

Al Ministro dell’Economia e delle Finanze
Prof. Pietro Carlo Padoan
Via XX Settembre, 97
00187 Roma

Al Presidente della CONSOB
Dott. Giuseppe Vegas
Via Giovanni Battista Martini, 3
00198 Roma

Al Governatore della Banca d’Italia
Dott. Ignazio Visco
Via Nazionale 91
00184 Roma

Al Presidente della Commissione Finanze della Camera dei Deputati
On. Daniele Capezzone
Palazzo Montecitorio – Piazza Montecitorio
00186 – Roma (Italia)
Per invii di lettere cartacee: Via della Missione, 10 – 00186 Roma

Al Presidente della Commissione Attività produttive, Commercio e Turismo della Camera dei Deputati
On. Ettore Guglielmo Epifani
Palazzo Montecitorio – Piazza Montecitorio
00186 – Roma (Italia)

Al Presidente della Commissione Finanze del Senato della Repubblica
On. Sen. Mauro Maria Marino
Palazzo Madama – Piazza Madama
00186 – Roma
Per invii di lettere cartacee: Piazza dei Caprettari, 79 – 00186 Roma

Al Presidente della Commissione Inductria, Commercio e Turismo del Senato della Repubblica
On. Sen. Massimo Mucchetti
Palazzo Madama – Piazza Madama
00186 – Roma

Last Updated: 26 January 2015
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