The new Corporate Governance Code in Italy: is this an advanced paradigm of corporate governance?
Latham & Watkins provided an excellent overview of the recently undertaken measures by the Italian Corporate Governance Committee toward introducing the new Corporate Governance Code.
"On December 9, 2019, the Italian Corporate Governance Committee defined the contents of the new Corporate Governance Code that was approved in its final version on January 31, 2020 (the 2020 Code). The 2020 Code will apply starting from January 2021. The 2018 Corporate Governance Code will remain in force until then".
What are the major drivers of the new Code?
"Long-term sustainability, engagement, proportionality, and simplification are the four drivers of the 2020 Code. In fact, the 2020 Code nudges Italian-listed companies to be more sensitive toward long-term sustainability through specific recommendations relating to remuneration policies for executive directors and key managers, providing that a significant part of their variable remuneration be linked to a companies’ performance in terms of ESG (environmental, social, and governance) requirements".
It seems that this new Code is able to influence the well-established corporate governance practices in Italian listed companies, for example:
- "Starting from 2022 Italianlisted companies will have to disclose, via the annual report on corporate governance and ownership structure, the measure and extent of the implementation of the new principles and recommendations under the 2020 Code".
- Boards are called to integrate business plans, internal control and risk management systems, as well as remuneration policies with appropriate sustainability goals.
- Listed companies renewing their corporate bodies in 2020 must implement new gender quota requirements increasing the number of members of the less-represented gender from one-third to at least two-fifths.
It is naturally to expect that this Code will give a fruitfuil soil for researchers to fix the new outlooks for the scholarly research in corporate governance in Italy.
The fill text of the review document is below