Italy Reforms Voting Rights Rules Amid Investor Concerns

Italy plans to amend rules on enhanced voting rights to prevent leading shareholders from bypassing minority investors in takeover bids. Critics argue the rules are misused, leading to power concentration. The government also lifts a ban on interlocking directorates in financial companies while maintaining quality control.

Italy is set to modify regulations concerning enhanced voting rights, a move aimed at preventing predominant shareholders from sidelining minority investors during takeover bids, according to a draft decree viewed by Reuters.

Originally implemented to strengthen investor influence and entice more business listings in Milan, the mechanism has reportedly been misused to privatize companies, counteracting government intentions. In response, enhanced voting rights will be halted at shareholder meetings addressing mergers for delisting or relocating headquarters abroad.

Additionally, the decree removes a 2011 ban on interlocking directorates for competing financial firms, citing that alternative measures will continue to ensure board autonomy. Italy's financial sector is under scrutiny, with activist investors expressing concerns over potential rule exploitation.