Paving the way for discussions at this National Roundtable session was the acknowledgement that in a climate where globalization processes are playing an increasingly more central role in Italy’s social and economic development, Italian firms also need to gear themselves up to being more globally competitive. Achieving this objective, it was suggested, brings with it a renewed need for financing or refinancing of many of the country’s firms and banks. The raising of financial resources on domestic and international markets has, however, become more difficult in the wake of the financial crisis and the resulting “systemic” collapse of confidence on the part of both private savers and institutional investors.
Whilst venture capital – and, hence, equity capital – is most suited to funding growth and innovation, it was noted that the number and importance of Italian companies listed on the stock exchange remains comparatively low when the overall economic scale of the country’s manufacturing base is considered. Various historical reasons were identified for the reluctance of Italian firms to open up their capital to outside investors, such as by listing on the stock exchange, which reasons were seen as underpinned by factors of a regulatory or cultural nature as well as cost considerations.
From a regulatory perspective, the area was deemed in many respects to be fraught with complexity and onerous in terms of requirements regarding, for instance, internal checks and market disclosure. Efforts at simplifying and rationalizing the rules governing this area would, it was felt, make listing by many companies an easier and more appealing option. The participants stressed, however, that any such regulatory review should not entail any substantial deregulation, which would otherwise risk generating opportunistic behavior on the part of operators and further reducing the confidence of investors.
In terms of cultural attitudes of Italian entrepreneurs towards the stock market and the costs associated with the listing process, the participants called for targeted tax-incentive measures, as well as new mechanisms to rein in the often prohibitive underwriting fees (especially for smaller firms) associated with listing. Indeed, as the size of Italian firms is one of the reasons that makes listing a non-cost-effective financing option, there was a perceived need to overcome this constraint by adopting a model that focuses on groupings of firms, along the lines of industrial districts, which could play a pioneering role in opening up access to financial markets, enabling districts or supply chains to tap into debt capital or equity financing.
The participants conceded that any discussion of listing and opening up a firm’s share capital necessarily involves a consideration of the ownership structures and corporate governance models to be adopted. The implementation in Italy in 2011 of the new measures introduced by the European Directive on the exercise of shareholders’ voting rights has seen an expansion of the role of – particularly foreign – institutional investors in the shareholder meetings of Italian listed companies. It was envisaged that this category of investors would play an increasingly more decisive role in the choice of governance models, by requiring effective business management systems and adequate guarantees of their rights as shareholders in return for their investment. For this reason too, it was felt that a rationalization of the regulatory framework and the legal protections afforded to minority rightsholders could help attract more foreign investment capital.
Finally, the participants considered the continuing paradox of the Italian financial system which sees the country boasting one of the highest stocks of personal savings in the world whilst many of its businesses remain under-capitalized. Policy measures aimed at reducing barriers and putting in place appropriate incentives to enable Italian savings to be channeled towards funding industry were therefore viewed as essential. Indeed, this approach was seen as being in accordance with the spirit of the Italian Constitution, which links the State’s role in “encouraging and protecting all forms of savings” with its responsibility to promote access to savings “for direct and indirect investment in shares”.