Italian companies face changes to the composition of their corporate boards

March 2012

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The composition of Italian corporate bodies will be extensively modified through both regulatory and legislative intervention.

The Italian Decree Law 201/2011 has been amended by Italian Law 214/2011 so that, for the first time, the issue of personal cross holdings within credit and financial markets is regulated. Article 36 of the Italian Decree Law now provides that directors and summit officers operating in the banking, insurance or financial markets are forbidden from covering or exercising similar positions in competing companies. The purpose of the prohibition is to improve competition between companies operating in those markets, neutralizing potential distortions or collusive conduct. Directors and summit officers that currently hold equivalent positions in more than one company operating in those markets are given 90 days to choose which single appointment to continue. In the case of non-compliance with this requirement, the relevant director or summit officer will lose all of their appointments.

In addition, the composition of corporate boards will be further changed as a result of Consob Resolution no. 18098 of 8 February 2012. This Resolution requires listed companies to apply a criterion of gender representation when appointing new members to corporate boards. The criterion provides that a gender which is less represented (usually the female gender) has a right to be represented on at least one third of the seats held on boards of directors and boards of statutory auditors (reduced to one fifth at the first renewal). The provision was first introduced under Italian Law no. 120 of 12 July 2011, which has amended the Italian Consolidated Financial Law, and has recently been introduced in the Italian Issuers’ Regulations pursuant to the above Consob Resolution. Italy is now in line with other Member States, which have all introduced some kind of compulsory quotas.