ITALY Trends and Developments Contributed by: Francesco Di Carlo and Filippo Raynaud, Fivers Studio Legale e Tributario
Law 21/2024). In this regard, the reform reflects the legislature’s attempt to rationalise the Italian system of internal controls, an issue that operators and legal scholars have debated for many years. Indeed, over the years there has been a proliferation of regulatory interventions – at the national and EU level – that created a matrix of internal controls that is not coherent and co-ordinated. This matrix of internal controls involves the supervisory board (ie, the board of statutory auditors, in the vast majority of companies that have adopted the so-called “traditional model” of governance), the internal board committees appoint - ed pursuant to corporate governance codes and/or sector law (eg, as required for banks and financial institutions), and the audit committee appointed pur - suant to EU Directive 2006/43/CE (and relevant Italian implementing regulation). This system consolidated over the years and created an overlapping of controls that proved ineffective and disorderly.
The Italian government also introduced further provi - sions regarding companies that adopt the so-called “monistic” (that is, one-tier) and “dualistic” (two-tier) governance systems, in an attempt to provide a more coherent and systematic framework for such alter - native governance models. The Italian legislature introduced these two alternative elective government systems only in 2003, in order to grant more flexibility to Italian companies to follow a more Anglo-Saxon model of governance (ie, the “monistic” system) or a more German-like model of governance (ie, the two- tier system). However, only a few joint stock compa - nies decided to adopt one of those two “alternative” governance models. As of 2024, 79.7% of market capitalisation of listed companies was represented by companies with the “traditional” model, 20.3% by companies with the “monistic” model and less than 1% by companies with the “dualistic” model (only one single listed company). It is widely acknowledged that one of the main rea - sons for this poor reception of the alternative govern - ance models is the lack of a clear and exhaustive set of rules.
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