Although the EU Shareholder Rights Directive was meant to have been fully implemented by 3 August 2009 at the latest, Italy is only just now mulling over shareholder responses to its the second consultation which was launched on 24 July 2009 and closed on 18 September 2009.

Over 20 consultation responses have been published, with investors, voting agencies and proxy solicitation firms being broadly supportive of the proposals, although Italy's employer federation, Confindustria, seeks to delay the implementation of the Directive in Italy until 2011 to allow a 'reasonable period of adjustment'.

The proposal for the Directive was launched by the EU in January 2006 furthering a process that began in 2003, the Directive was adopted by the EU in July 2007, and EU Member States were required to bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 3 August 2009 at the latest. Further delay to the implementation will be unacceptable to many shareholders at Italian companies, whose, as Manifest's 2009 Voting Review notes, informed and timely participation of institutional investors at meetings is greatly hindered by the status quo. This contributes to a dis-proportionate dominance of blockholders at Italian meetings.

The proposals amount to a massive shake-up of general meeting procedures for Italian companies. Key changes in the proposal include:

Measure Current Requirement Proposed Requirement Meeting Notice Publication 30 days before meeting 30 days before meeting;
40 days before meeting if slate elections proposed for boards; Board report on agenda items 15 days before meeting 30 days before meeting Publication of candidate lists for slate elections 10 days before meeting 21 days before meeting Record date for publication of lists Lists must be filed not later than 15 days prior, and shares effectively blocked until after the AGM Separate record date of 30 days prior for the filing of candidate lists Determination of eligiblity to participate Notification deadline of 2 days prior, intermediaries and/or companies may provide for share blocking. Record date is meeting date itself. Record date of 5 days prior Publication of voting results Not required for all meeting business items Within 15 days of meeting on website

Confindustria suggest:

• The notice periods proposed will 'unduly prolong' the proceedings of meetings;
• The current system 'fully meets' the goal of facilitating the submission of lists citing that the deadlines are 'well known to the shareholding structure' and notes that members may begin preparing lists well in advance of the publication of the meeting materials;
• The publication of the meeting notice together with the associated documentation 'constitutes a heavy burden on issuers' particularly given the  proposal to extend the publication deadlines;
• The right to submit shareholder resolutions within 10 days of the publication of the notice should remain at the current 5 days;
• The complexity of the changes and the implementation actions required by issuers justify its request to postpone the deadline for the full implementation of the Directive so that the new rules apply only to meetings where the meeting notice is published after 31 December 2010 (ie meetings held from late January 2011 onwards).

Confidustria does however welcome the possibility for companies to avoid having to have multiple calls of general meetings if so written into the Articles of Association.

In one respect, Confindustria's comments on the publication of meeting materials 30 days ahead of the meeting have some justification. Italian companies are required to hold their AGMs withing four months of the year end. When combined with a requirement for publication of all materials 30 day prior, the outcome could be an even further compressed Italian meeting season (possibly being as clustered together as Japan) - causing differing headaches for investors with multiple holdings. The relaxation of the 4 month deadline in favour of a six month deadline may be more appropriate (and indeed be more aligned with other European markets).

Meanwhile ASATI, the association of small shareholders in Telecom Italia, in its response described the current system for collecting proxies as "backward" and "third world", with two trips to the bank being required in order to submit proxies.

This latter comment sums up the reasons to not delay implementation of the Directive any further. The final proposals are due to be released by the Treasury Department shortly.

Further Reading

Consultation Paper >>
(in the Italian language)

Consultation Responses >>
(Almost all responses are in the Italian language)