Italian Boards and The Strange Case of the Minority Becoming Majority

Italian law provides for a fairly unique and interesting mechanism allowing “minority” shareholders to appoint a percentage of board members. In a nutshell, this system—called “list voting” or “slate voting” and regulated by the “Consolidated Law on Financial Markets”—injects an element of proportionality in the election of the board. It is profoundly different from “proxy access” in the U.S., but it shares with it the underlying goal of granting a stronger voice to institutional investors and qualified minorities. Significant differences also exist with “cumulative voting,” a rule more familiar to American readers, because list voting is more simple and leads to more predictable outcomes. As the discussion on proxy access and active investors unfolds in the U.S. and other countries, and also considering the significant investments of international funds in Italian listed corporations, it is interesting to take a closer look at these rules and their actual impact.