Legal Rules, Shareholders and Corporate Governance: The European Shareholder Rights’ Directive and Its Impact on Corporate Governance of Italian Listed Companies: The Telecom S.P.A. Case

Abstract

This paper investigates the role that shareholders may play in corporate governance by analysing the European Shareholder Rights’ Directive n. 36/2007/EC and the consequences of its implementation upon general meetings and ownership structure of Italian listed companies. It summarises the rules introduced by the n. 36/2007/EC Directive in European company law aiming at strengthening shareholders’ voice in general meetings on the assumption that this is a prerequisite for sound corporate governance. It then presents data of Italian general meetings from 2010 through 2014 to highlight a rise in attendance and voting in particular by foreign institutional investors especially on certain items (such as directors’ remuneration, election and dismissal, and approval of financial statements). Finally the study presents the Telecom S.p.a. case to show that the new provisions can overturn the ownership structure of Italian companies when there is a de facto control and, at the same time, may play a significant role in improving corporate governance by balancing the power of dominant shareholders.

Keywords: Shareholders’ Voice, Corporate Governance, European Shareholder Rights’ Directive n. 36/2007/EC, Telecom S.P.A.