Three models for corporate governance

When establishing a joint stock company in Italy, there are three different models of corporate governance from which to choose. As well as the traditional model, with an administrative body and a board of auditors, there are "single" and "dual" systems which follow the Anglo-Saxon and German examples respectively.

In the single model, company management is the responsibility of a board of directors appointed by the shareholders, whereas legal control is granted to the management control committee, appointed by the board of directors. The circulation of information between the board and the controlling body, all of which saves time and money, is central to this model.

In the dual model, a management board and a supervisory board operate together. The supervisory board controls the activities of the directors and has the power of appointing or dismissing directors, together with ensuring that they are responsible for their actions and approving the budget. This system seeks to achieve easier and quicker decision-making procedures, shifting traditional shareholder duties to the two boards. This system of governance makes separation of ownership and control of company bodies more efficient.

Whatever model is chosen, the company´s functioning is ensured by rules which combine the need to avoid interference in the decision-making process (such quorums for establishing responsibility actions promoted by minority groups) with the need to avoid too much damage to the company when directors act improperly. In this respect, the new regulations on conflicts of interest are important: managers must declare from the outset any personal interest in planned transactions. On the other hand, managers are protected by the elimination of controls in the general running of affairs, which are replaced by specific obligations. In this way, it is possible to avoid an excessive extension of their responsibility, which sometimes ended up becoming objective, by freedom from specific situations.