Abstract
The article offers a complete overview of the normative framework provided by Italian law and self-regulation regarding the stewardship of asset managers and asset owners. In particular, it focuses on the relationship between hard law and soft law by outlining overlaps and divergences under five different perspectives: the scope of application, the integration of ESG factors, the extension to debtholder stewardship, the type of collaborative engagement promoted, and the problem of enforcement. Building on extant authoritative scholarship, the paper argues that in order to achieve a dynamic synergy between the two layers of the regulatory framework and avoid useless overlaps, Italian soft law should highlight the specificities of the national corporate governance landscape by nudging institutional investors (including foreign ones) into a set of behaviours that is country-specific, offer guidelines to integrate ESG factors, stimulate stewardship for debtholders, further develop platforms for collaborative engagement, and advance a complementary enforcement strategy to the one provided by hard law.
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Notes
Also: ‘initiatives’, see Alvaro et al. (2019), p 15.
Reddy (2021), p 843.
Engagement can take the many forms described in Carbonara and Gilotta (2021), pp 239–242.
Rock (2018), pp 373–374.
Montalenti (2012), p 246, highlights how in concentrated ownership systems the preference for the so-called ‘Wall Street Rule’ is difficult to overcome.
Bebchuk and Hirst (2019b).
Platt (2020).
See Hirschman (1970).
Fink (2018).
See also Gilotta (2022), p 23.
Article 24 of the Consolidated Law on Finance.
Visentini (2000), p 132.
Moia (2001), p 316.
Regarding the relationship between the requirement of the autonomy of the manager from the investors posited by the Consolidated Law on Finance and the position of the investors in SICAFs, see Ardizzone (2016).
Through Legislative Decree No. 49 of 10 May 2019.
Resulting from the transposition of Article 1 of Directive (EU) 2017/828 amending Article 2 of Directive 2007/36/EC by adding subparagraphs (e) and (f).
Article 124-quater(1)(a) CLF.
Article 1(5)(d) CLF.
Pursuant to Article 124-quater(1)(b) CLF.
Including the Italian branch offices of companies having their registered office in a third state.
According to Article 36 of the Italian Civil Code. By way of derogation from the provisions of Presidential Decree 361/2000, recognition of legal personality follows the authorisation for the exercise of the activity adopted by COVIP; for these pension funds, COVIP is in charge of keeping the register of legal persons and fulfils the relevant requirements (Article 4(1)(b) of Legislative Decree 252/2005).
Article 33(2)(b) CLF.
Italian or authorised in Italy and operating through pension fund management.
Italian or of a third state, having the registered office or a branch in Italy.
Article 20 of Legislative Decree 252/2005.
European Commission (2011), p 14.
Articles 3h and 3i of Directive (EU) 2017/828, transposed in Italy through Articles 124-sexies and 124-septies CLF.
The point is highly debated, see Roe (2022).
Recitals 19, 20, 21 and 22.
Except ‘pre-existing funds’, which can manage resources directly without resorting to specialised intermediaries, and open funds under Article 12 of Legislative Decree 252/2005 which can be managed by the company that set up the fund.
Gomtsian (2021). Birkmose (2021b), pp 174–175. On this point, Article 6(8) of Legislative Decree 252/2005 states that the selection process of the asset manager must be conducted following the instructions adopted by COVIP and, in any case, in such a way as to ensure the transparency of the procedure and consistency between the objectives, management methods, and criteria for selecting managers.
Under Article 6(8)(c) of Legislative Decree No. 252/2005.
Moia (2001), p 333.
See the scheme of the agreement for the management of pension funds’ resources under the defined contribution scheme (COVIP resolution of 7 January 1998). The point was also emphasised by COVIP President Mario Padula at the 26 March 2019 hearing at the Italian Chamber of Deputies regarding the draft of the Legislative Decree implementing Directive (EU) 2017/828, see COVIP (2019), p 6.
Under Article 6(9) of Legislative Decree 252/2005.
Carbonara and Gilotta (2021), p 234, n. 1.
See Directive (EU) 2014/95 on the disclosure of non-financial information, and the more recent Directive (EU) 2022/2464 on corporate sustainability reporting. See Strampelli (2022a).
While Article 3g of the Directive uses the word ‘cooperate’, Article 124-quinquies CLF uses the word ‘collaborano’, not ‘cooperano’.
The reference is to conflict management: the rule does not require minimising or avoiding conflicts; in this sense, see Birkmose (2021a), pp 158–159. Furthermore, Recital 17 of the Directive states that the engagement policy ‘should also include policies to manage actual or potential conflicts of interests’ [emphasis added]. This wording is a remainder of Recital 11 of the Proposal for a Directive submitted by the Commission, which, at Article 3f, para. 2, stated: ‘Member States shall ensure that the engagement policy includes policies to manage actual or potential conflicts of interests with regard to shareholder engagement’.
The original Proposal for a Directive submitted by the Commission formulated Article 3f, para. 1 as a list: ‘This engagement policy shall determine how institutional investors and asset managers conduct all of the following actions: (a) to integrate shareholder engagement in their investment strategy; (b) to monitor investee companies, including on their non-financial performance; (c) to conduct dialogues with investee companies; (d) to exercise voting rights; (e) to use services provided by proxy advisors; (f) to cooperate with other shareholders’. The expression ‘determine how [intermediaries] conduct all’ was changed into ‘shall describe how’ in the final text.
Recitals 12, 14 and 15; but also 28, according to which directors contribute to the long-term success of the company, and 29, 30 and 38.
Recitals 2 and 15.
Paragraph 3 of Article 124-quinquies CLF. The Explanatory Memorandum to the Italian Draft Legislative Decree implementing Directive (EU) 2017/828 states: ‘Article 124-quinquies requires ... to disclose information about the adoption of an engagement policy towards investee companies or, if not, about the reasons why it has not been adopted (comply or explain approach)’ (p 9), as does Recital 17 of the Directive, which mentions: ‘Institutional investors and asset managers ... should either develop and publicly disclose a policy on shareholder engagement or explain why they have chosen not to do so’.
Katelouzou and Sergakis (2021), p 207, argue that the Directive is not far from imposing an obligation to demonstrate engagement. According to Chiu (2016), p 35, the (at the time only proposed) Directive would contain a ‘normative expectation’ for engagement to become an integral part of investment management; with reference to the draft Directive, the author observed a presumption in favour of considering engagement as an optimal investment management practice, albeit without the imposition of a ‘duty’ to engage. On this point, see also Daccò (2019), p 522. Chiu (2016), pp 39–40, refers to the thesis according to which the Commission did not impose an obligation to engage, thus leaving operators free to determine the nature of the engagement most functional to them; commitment as such would therefore remain relegated to the realm of soft law and the obligation to develop an engagement policy could be seen as a meta-regulatory provision, where general principles would be established, while detailed implementation would then be left to the discretion of the operators. According to Gilotta (2022), p 16, the promotion of engagement does not translate into the recognition of new rights, powers or prerogatives, but much more limitedly into the invitation to an assiduous and conscious (and therefore more incisive) exercise of powers (voting) or ‘faculties’ (control over management and coordination with other shareholders or stakeholders) that the shareholder already possesses; since these powers and prerogatives remain devoid of any element of bindingness, the invitation to engagement does not become an obligation, since the institutional investor retains the right, under the ‘comply or explain’ rule, not to adopt any engagement policy or to adopt one that does not provide for a commitment to vote, to exercise control over management or to collaborate with other shareholders or stakeholders; Gilotta believes, however, that the impetus towards the adoption of such policy (and thus towards the commitment to exercise those powers and faculties, which would then cease to be such and become obligations, i.e., actions whose non-execution may prove to be a source of liability) is nonetheless high. Denozza (2022), p 106, argues that the reference to stewardship seeks, above all, to transform what could appear as a simple exhortation into what tends to take the form of a statement of an obligation, perhaps not so precise as to become even legally enforceable.
See Marchetti (2013).
These provisions were then outlined in Articles 9a, 9b and 9c of the proposed Directive; note that the originally proposed Article 9c was titled ‘Right to vote on related party transactions’.
European Commission (2012), pp 4–5, 8.
Ibid., p 8 [emphasis added].
Illustrative Report to the Italian Draft Legislative Decree implementing Directive (EU) 2017/828, p 9.
Ibid., p 3.
Ibid., p 4.
In this sense, Recital 17 of the Directive states that the engagement policy ‘should illustrate ... what different engagement activities they choose to conduct and how’ [emphasis added]. The Explanatory Memorandum to the Draft Legislative Decree implementing Directive (EU) 2017/828 states: ‘The policy shall describe ... whether and how investors engage in dialogue with investee companies, exercise voting and other rights attached to shares, collaborate with other shareholders or communicate with the company’s stakeholders as well as manage actual and potential conflicts of interest in relation to their engagement’ (p 9, [emphasis added]). As to the degree of detail due, see Strampelli (2021), p 1108, who notes that with reference to the exercise of voting rights the wording is sufficiently generic to leave a significant margin of discretion as to its application and, in particular, as to the degree of detail of information that must be provided, as practice shows that there are significant differences in content and analyticity among the voting indications contained in the engagement policies.
See Lener (2019), p 507, who believes that investors will now have to engage and monitor at least a little if they want to write something meaningful in their annual reports. According to Chiu (2016), p 35, the disclosure-based legislation entails that a certain amount of engagement activities must be carried out for there to be sufficient reporting.
Carbonara and Gilotta (2021), p 249.
In the words of Balp (2020), p 960, the Article requires intermediaries to establish their position on the conduct they intend to pursue concerning engagement. According to Maugeri (2021), p 1360, this solution is designed to generate ‘social’ pressure on the intermediary, who, exposed to the judgement of the market and to the competition of the other institutional investors, is unlikely to opt for a complete renunciation of any engagement policy in light of the ‘reputational’ damage that might result.
Denozza (2022), pp 104–106.
Ibid., p 106. Carbonara and Gilotta (2021), pp 252, 255, emphasise that the information provided to the market as to the engagement policies adopted enables investors to better select the subjects to whom they entrust their savings, so that the competition in the collection of savings can reward or punish these choices.
Sectoral legislative acts of the Union must be regarded as lex specialis with respect to Directive (EU) 2017/828, as indicated in its Recital 54 and Article 1(7). See Balp (2020), p 961.
Costi (1998), p 320. On this point, see also Cheffins (2010), pp 1014–1015: ‘[A]s Lord Myners indicated in a February 2010 speech, those owning shares on their own account can legitimately justify shirking their ownership “duties” because they directly accept the consequences of bad governance in the form of falling share prices. In contrast, he said, those owning or managing shares on behalf of others should engage in effective stewardship to fulfil their mandate to protect the value of assets held in trust’. According to Stella Richter Jr (2010), p 801, cited in Alvaro et al. (2019), p 14, n. 40, the exercise of powers deriving from managed financial instruments is no longer the free content of a prerogative but becomes the object of a power in the technical sense, of a function. See also Carbonara and Gilotta (2021), pp 273–274, and Maugeri (2021), p 1355.
Article 35-decies(e) CLF.
See Lener (2000), p 283, according to whom the legitimacy of a line of conduct that envisages the systematic abstention from the exercise of the right to intervene and vote must be excluded, precisely in light of the functionalisation of the vote to the care of another person’s interest.
Article 35-decies(e) CLF.
Lener (2019), p 510; Lener (2000), p 284; Maugeri (2016), p 12; Carbonara and Gilotta (2021), p 274; Strampelli (2022b), p 133. Moreover, it is precisely because of the inadequacy of the unconditional adherence to voting that the introduction of an obligation to vote is certainly an idea to be rejected at the level of policy-making. Although some jurisdictions already mandate the vote, see OECD (2011), p 34, there is a risk that such obligation would paradoxically incentivise selling shares rather than voting them, as pointed out by Arsalidou (2012), p 351. Moreover, as noted by Maugeri (2016), p 3, the establishment of a strict voting obligation for the asset manager would not capture the very meaning of the relationship between the ‘voice’ and the ‘exit’ options, which is instead to be understood not in terms of alternation, but of complementarity; on this last point, see also Lener (2000), p 281.
Article 19(1)(a).
Article 14(1)(a).
The point is also made in Annex XII: Shareholder engagement and financial services legislation accompanying the Impact Assessment of the draft Directive (9 April 2014), p 123.
Article 21.
Ibid.
Transposed through Article 124-quinquies, para. 5 CLF.
On the terms and modalities of the disclosure, see Article 124-novies, paras. 2 and 3 CLF; see also Carbonara and Gilotta (2021), p 251, n. 25.
Birkmose (2014), p 222. This was also noted in Annex XII: Shareholder engagement and financial services legislation accompanying the Impact Assessment of the draft Directive (9 April 2014), p 124, which stated: ‘However, there is no obligation to be transparent about this policy, nor an obligation to provide it to unit holders’.
Under Article 2377 of the Italian Civil Code.
Article 2373 of the Italian Civil Code. Bordiga (2013), p 218, notes that there is an apparent consistency between the interest of which the institutional investor is the bearer on behalf of its clients and that of the investee company. However, the former invests in a plethora of companies which may well have conflicting interests, so an intermediary can have a conflicting interest at the general meeting of a particular company because, for instance, it holds shares in a competing company in which it has made a larger investment. The author notes that, in the hypothesis just described, the investor must abstain from exercising voting rights if this is decisive for the resolution, under penalty of annulment of the resolution passed. This conditioning requires not voting even in cases where the clients’ interest in the overall value of the shares held would justify it. The author considers that this also applies with reference to the possible exercise of other minority rights since these must be exercised in compliance with the interest of the specific company to which they refer, and cannot legitimately be used to damage the latter to increase the value of another investment. On this point, Costi (1998), p 323, underlines a problem of coordination between the loyalty that the intermediary owes to its clients and that owed to the company, because the former may have shareholdings of different sizes in competing companies. If the interest in one is greater than the interest in the value of the other, even though the pursuit of the interest of the clients should lead to sacrificing the interest of the latter, it must abstain from voting. See also Visentini (2000), p 140.
Just as regulated is the management of conflicts of interest in individual portfolio management services and in investment advice services, which are subject to the provisions contained in Directive (EU) 2014/65 and Delegated Regulation (EU) 565/2017.
In this sense, see also Carbonara and Gilotta (2021), p 253, n. 31. In addition to the aforementioned conflict management contained in the strategies for the exercise of voting rights (therefore also related, at least in part, to engagement), a mention should also be given to Articles 12 and 14 of Directive 2009/65/EC and Articles 17 to 20 of Directive (EU) 2010/43 for UCITS; in particular, Article 18 provides that management companies shall draw up, apply and maintain an effective conflicts of interest management policy; Articles 35-decies(1)(b) and 167 CLF (on disloyal management) and Articles 115, 116, 117 and 118 of the Intermediaries Regulation (CONSOB Resolution No. 20307/2018).
See also Article 36(3) CLF, according to which the SGR that established the fund or the management company that has taken over its management shall act independently and in the interest of the fund participants.
See Financial Reporting Council (2012), p 1: ‘Stewardship is more than just voting. Activities may include monitoring and engaging with companies on matters such as strategy, performance, risk, capital structure, and corporate governance, including culture and remuneration’; European Commission (2011), pp 12–13: ‘Shareholder engagement is generally understood as actively monitoring companies, engaging in a dialogue with the company’s board, and using shareholder rights, including voting and cooperation with other shareholders, if need be to improve the governance of the investee company in the interests of long-term value creation’ (but see also Madsen (2018), p 146); Rule 19.5.1A of the Financial Conduct Authority’s Conduct of Business Sourcebook: ‘[S]tewardship relates to a firm’s exercise of rights or engagement activities in relation to the investments attributable to the firm’s relevant policyholders or pathway investors, and may include: a) the exercise of a firm’s voting rights in those investments; and b) monitoring and engaging on matters such as strategy, performance, risk, culture and governance of the investments’; lastly, see also Bebchuk and Hirst (2019a), pp 2044–2046.
Santoni (2020), p 1615, points out that fund managers do not aim at maximisation of individual investee companies. See also Tedeschi (2005), pp 228–230. According to Balp (2022), p 189, the concrete implementation of stewardship activities has regard (except in particular cases and by way of exception) not to individual investee companies but to the portfolio as a whole.
Bordiga (2013), p 222. In this sense, the interest of clients is the compass that must guide the behaviour of the asset manager and the institutional investor, see Maugeri (2016), pp 12–13, the limit being, as mentioned, the potential damage caused to the assets of the investee company, see Pasquariello (2017).
Article 2380-bis(1).
But concerning the relationship between the selective dialogue and Article 2380-bis of the Civil Code, see Gilotta (2022), pp 2, 70, and 83–103, who rules out a contrast between the two.
Article 35-decies(a) CLF and Article 97(1)(a) of the Intermediaries Regulation. See also Article 21(1)(a) CLF for portfolio management services.
Under Article 33(2)(a) CLF.
Here meant generically, not within the meaning of Article 124-quater CLF.
CONSOB (2022), p 69. Alvaro et al. (2019), p 29, report the data collected by CONSOB regarding 2017. See also the data reported in Strampelli (2022b), p 132: ‘Significantly, foreign institutional investors attended meetings for all 100 of the largest Italian companies since 2015 and, in 2018, cast on average around 29% of the votes. Namely, for the 2018 proxy season, institutional investors collectively held a majority of the votes cast at the general meetings of one-third of the thirty-five most capitalised Italian listed companies’.
Roach (2011), p 471.
Katelouzou and Siems (2022), p 651.
On this point, see also the Policy for the formation of lists of candidates for the corporate offices of companies listed on Italian regulated markets published by Assodire.
For example, BlackRock’s Investment Stewardship Annual Report 2021, p 52, states: ‘BlackRock Investment Stewardship adheres to multiple stewardship codes and other market-level stewardship related requirements’, and the approach to the Dutch, Japanese, Taiwanese and UK code recommendations (but also to Directive (EU) 2017/828) is indicated in this Report.
See Assogestioni (2016), pp 2, 4 and 6.
By contrast, the 2010 UK Code stated: ‘Specifically, the “explain” option means that overseas investors who follow other national or international standards that have similar objectives should not feel application of the Code duplicates or confuses their responsibilities. Disclosures made in respect of those standards can also be used to demonstrate the extent to which they have complied with the Code. In a similar spirit, UK institutions that apply the Code should use their best efforts to apply its principles to overseas holdings’ [emphasis added].
Article 1(2)(a) of amended Directive 2007/36/EC.
Article 124-quater(2) CLF.
Katelouzou and Sergakis (2021).
Birkmose (2014), p 220.
Ibid., p 225, while Chiu and Katelouzou (2016), pp 140–150, note this with reference to the United Kingdom.
Katelouzou and Sergakis (2021), p 231.
European Parliament (2012).
According to Katelouzou and Sergakis (2021), pp 203, 207, soft law offers a crucial mechanism for regulatory innovation, and can expand or adapt the pan-European norm contained in the Directive to national typicalities: symbiosis between the two levels can allow adaptation of the rule on engagement policies (which nevertheless guarantees at least minimum harmonisation) to the local conditions and characteristics of the national system.
Ibid., p 225, according to which the voluntary nature of soft law instruments may also stimulate compliance from foreign investors: ‘[F]oreign actors may want to become signatory parties of such initiatives for reputational purposes and to signal their proximity to a specific local market and clients for the expansion of their activities’.
Ibid., pp 203, 207.
Ibid., p 230.
See below, nn. 205 and 206.
Katelouzou and Sergakis (2021), pp 203, 207, speak of a ‘multi-layered regulatory landscape’.
Daccò (2019), p 522, considers that there are several references in the Directive that seem to indicate the attribution of a ‘social’ role to institutional investors, aimed at protecting broader interests (of the company, other shareholders, stakeholders, the market and the community in general). Chiu (2021) argues that the long-termism of investee companies can be considered as a public interest objective, not derived from the private paradigm of investment management. Gilotta (2022), pp 16–18, speaks of creeping functionalisation aimed at the pursuit of interests that are not exclusively private and of a not indifferent component of institutionalism, recalling Montalenti (2018a), pp 313–314.
Daccò (2019), p 522.
European Commission (2012), p 8.
Birkmose (2014), p 230.
Chiu (2016), p 36.
Ibid., pp 39–40.
Birkmose (2021a), p 152.
See ibid., pp 156–157.
Summary of the Regulatory Impact Analysis of the Italian Legislative Decree transposing the Directive, p 6.
Under Article 14(1)(a) of Directive (EU) 2009/65 for UCITS managers, Article 35-decies(1)(a) CLF and Article 97(1)(a) of the Intermediaries Regulation, but also Article 21(1)(a) CLF for portfolio management services. Daccò (2019), p 523, underlines how the reference to the integrity of the markets protects general interests beyond those of investors; there is therefore a public interest, a collective interest that transcends that of individual investors and that underlies public order requirements of which the institutional investor is called upon to be the guardian.
Visentini (2000), p 139.
Chiu (2013), pp 463–464.
Ibid., p 466.
But on the lack of adequate incentives in this sense, see Maugeri (2021), pp 1356–1357.
Denozza (2021), p 32.
Wong (2010), p 408, reports on the reduction of portfolio turnover from five years to five months.
Chiu (2021).
Davies (2022), pp 47, 58, 64.
Emphasis added.
Davies (2022), p 60.
Ibid.
Ibid.
Chiu (2021).
Ibid.
Ibid.
A similar conclusion is reached by Maugeri (2021), pp 1358–1359, according to whom in a regulatory context that continues to base the regulation of asset management on the interest of the clients, the affirmation of an obligation on the asset manager to ‘integrate’ (and not simply ‘consider’) ESG objectives in its investment strategies even in the absence of an express preference in this sense of the fund participants could only be conceived by following two argumentative paths: on the one hand, by assuming that the pursuit of ESG objectives leads to an automatic increase in the value of the entire portfolio – an assumption that, even if one were to agree with its theoretical and empirical soundness, results in making the intervention of the lawmaker superfluous (given that the asset manager would spontaneously integrate ESG factors in order to pursue the beneficiaries’ best economic interest); alternatively, one could envisage a regulatory intervention that, by modifying the function of management contracts, would enable the institutional investor to pursue ESG objectives even when detrimental to the overall value of the portfolio – a change that is not, in fact, pursued by the European legislator, which rather moves from the shared assumption of the need to extend the fiduciary obligations of the asset manager to consideration of the ‘sustainability risk’ as a systematic risk (i.e., non-diversifiable) of the portfolio and whose management then becomes unavoidable precisely to preserve the value of the managed assets and safeguard the financial return.
Such as the reference to market integrity, see n. 139.
For example, hard law states that supplementary pension schemes may take into account the potential long-term impact of their investment decisions on ESG factors, see Article 6(14) of Legislative Decree 252/2005.
An example of a stewardship code significantly oriented towards stakeholder relations is the South African one. See Reisberg (2011), p 131.
Legislative Decree 252/2005.
Article 4-bis(2).
Article 5-bis(4)(g).
Article 5-nonies(2)(h).
Article 6(5-quater).
Article 13-ter(1)(c).
Article 13-quater(2)(h).
Article 17-bis(5).
The Code reads: ‘There has been significant growth in investment in assets other than listed equity, such as fixed income bonds, real estate and infrastructure. These investments have different terms, investment periods, rights and responsibilities and signatories will need to consider how to exercise stewardship effectively in these circumstances. ... The Code contains more detailed reporting expectations for listed equity assets. This reflects the relative maturity of stewardship for listed equity assets. However, signatories should use the resources, rights and influence available to them to exercise stewardship, however capital is invested’. Extending to other asset classes, stewardship thus goes beyond the relationship with listed companies and re-focuses on the best management of clients’ resources.
‘For fixed income assets, signatories should explain their approach to: seeking amendments to terms and conditions in indentures or contracts; seeking access to information provided in trust deeds; impairment rights; and reviewing prospectus and transaction documents’.
ICGN (2020), p 27.
Micheler (2013), p 43: ‘Companies are currently also deprived of the views of bondholders, whose views on governance and risk management are also potentially relevant’.
See Lener (2019), p 510, according to whom the presence of serious institutional investors can act both as a vehicle for the rational allocation of resources and as an instrument to protect defenceless savings.
Gomtsian (2023), p 403.
Ibid., p 403.
On this point, see Gomtsian (2023), p 413: ‘Debtholder rights, unlike shareholder rights, are contractual in nature and do not provide debtholders with extensive grounds for monitoring and engaging over a broad range of matters unrelated to the borrower’s credit risk. Additionally, there are more layers of intermediaries between public debtholders and the managers of borrowing firms than between shareholders and corporate managers, complicating and increasing the costs of direct engagement by debtholders further’.
Gomtsian (2023).
Article 1(6)(a); Birkmose (2021a), p 169.
Article 124-quater(2) CLF.
The expression is from Lener (2019), p 515.
For an analysis of the relationship between stewardship and the concentration of control, see Lim and Puchniak (2022), p 599.
Assogestioni (2019), p 10.
Balp and Strampelli (2020a), pp 58–61.
The point is debated, see Cremers et al. (2021).
European Commission (2011), p 13.
Concerning foreign initiatives, Balp and Strampelli (2020b), p 139, also mention Eumedion in the Netherlands, the US Council of Institutional Investors, and the UK Institutional Investors’ Forum.
Lener (2019), p 512, uses the Italian term ‘regia’.
Balp and Strampelli (2020b), p 185.
Ibid., p 188.
Katelouzou and Siems (2022), p 652: ‘[T]he most recent Italian codes mention collect thirteen times each. This emphasis on shareholder collective action in the Italian context is not surprising if one considers the strategic role of Assogestioni, the issuer of the Italian stewardship principles, in facilitating collective engagement by institutional shareholders especially in relation to the appointment of a minority of the members of the management and the statutory auditors’ boards’.
Katelouzou and Sergakis (2021), p 226.
Balp and Strampelli (2020b), p 174.
Roberts (2015).
Reddy (2021), p 865.
See the Mefop Guidelines, p 6, n. 5.
Similarly, Article 3f, para. 2 of the original draft Directive stated: ‘Member States shall ensure that the engagement policy includes policies to manage actual or potential conflicts of interests with regard to shareholder engagement’ [emphasis added].
Article 193-bis.1(1).
Birkmose (2014), p 251: ‘If the mandatory disclosure rules only require institutional investors to disclose voting and engagement policies along with actual voting records, it will be possible to sanction non-compliance’.
See Strampelli (2022b), p 147.
Balp (2020), p 963.
The topic has already been exhaustively explored by Katelouzou and Sergakis (2022), p 572.
Tilba (2022), p 1017.
Alvaro et al. (2019), p 60.
Reddy (2021), p 847.
Katelouzou and Sergakis (2021), pp 207, 230.
Ibid., p 231: ‘The proposed multiplication of soft-law stewardship norms in Italy by Mefop is reflective of the malleable character of soft-law stewardship initiatives that aim to help market actors to better absorb top-down regulation, such as the SRD II rules, and guide them towards meaningful compliance and higher levels of stewardship practices. Such initiatives are even more important when top-down regulation is not customised to national circumstances, as is the case with the SRD II transposed rules’.
Ibid., p 232.
Ringe (2021).
European Commission (2010), p 17.
Abriani (2022), pp 128, 132.
The extension of engagement transparency to AIFs is particularly significant because the obligations set forth in Article 124-quinquies only apply to operators investing in shares listed on a regulated market in the European Union, in relation to their engagement as shareholders; for example, an Italian SGR stated: ‘[A]s of the date of publication of this press release, there are no shareholdings in the portfolios of the AIFs managed by the SGR in companies with shares admitted to trading on an Italian regulated market or in another European Union Member State. It will be the responsibility of the SGR to draw up and publish an engagement policy pursuant to Article 124-quinquies CLF should the conditions requiring its adoption arise’. Soft law can thus expand the perimeter of transparency outlined by hard law.
According to CONSOB (2022), at the end of 2021 only four Italian listed companies had opted for the one-tier model and one for the two-tier model.
Cuomo (2021).
Article 1, recommendation 3 of the Code.
Strampelli (2022b), p 149, outlines how the explicit incorporation of ESG factors into the stewardship framework could, in some sense, alter the role of the Italian stewardship principles and, to some extent, broaden their role, especially if guidance will be provided as to how ESG factors should be incorporated into stewardship activities. According to Katelouzou and Klettner (2022), p 565, in countries where hard law on sustainability is strong, such as in Europe, stewardship codes can act as implementation guidelines.
The BVI Rules of Conduct of 2019 and the DVFA Stewardship Guidelines published in March 2020 are worth mentioning; however, as Ringe (2021), p 112, notes, ‘these self-binding codes do not live up to the obligations of a sophisticated stewardship code, and do not come with a comparable legal force’.
Katelouzou and Sergakis (2021), p 213: ‘This difference in authorship has some impact on the content and scope of the stewardship codes’. Hill (2020), p 182: ‘These differences in origin ... can also affect the extent to which a stewardship code tolerates or encourages shareholder activism, including collective activism’. See also Alvaro et al. (2019), pp 23–24.
Micheler (2013), p 37.
This was noted by the Commission in its 2011 Green Paper, European Commission (2011), p 16.
Mayer and Torggler (2021), pp 222–223.
Glass Lewis (2024), p 5.
ISS (2024), p 11.
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Corgatelli, M. Reconstructing the Framework of Institutional Investor Stewardship in Italy: Synergies Between Hard and Soft Law. Eur Bus Org Law Rev (2024). https://doi.org/10.1007/s40804-024-00315-8
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DOI: https://doi.org/10.1007/s40804-024-00315-8
Keywords
- Institutional shareholders
- Asset managers
- Asset owners
- Stewardship
- Shareholder Rights Directive II
- Soft law
- Scope of application
- ESG
- Debtholders
- Collaborative engagement
- Enforcement