Tuesday, February 21, 2006
Baby Steps in Italy
Italy has passed new corporate governance rules that went into effect at the end of January. Like the new rules in the U.S. resulting from a series of scandals here, Italy's new rules were triggered by the Parmalat scandal 3 years ago.
Under the new rules minority shareholders have been given more power. If the board has 7 or more members, minority shareholders must elect at least one director. Although there is still no requirement that a majority of directors of public companies be independent, Italy has taken a baby step in this direction with the requirement that at least one director be independent.
The reforms in Italy are far from complete. A move toward a majority of independent directors, as well as changes to Italy's accounting rules, are still needed.