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Glass Lewis raises concerns over Italy's capital markets bill

MILAN (Reuters) - Leading governance adviser Glass Lewis has voiced concerns over an Italian bill that aims to overhaul the country's capital markets and includes measures that boost the influence of listed companies' top investors.

Comments by Glass Lewis echo those made by representatives of large foreign investment funds as well as of Italy's financial industry who have criticised the bill, saying it could backfire and discourage foreign investments.

The aim of the government's proposal is to make it more attractive for companies to list and attempt to stem a steady flight of firms which have abandoned the Milan bourse and sometimes even Italy as a business domicile.

Under the proposed legislation, to which Italy's upper house of parliament will give final approval this week, listed companies can issue shares that boost up to 10-fold the voting rights of longstanding investors.


"We remain concerned about the further misalignment of the one-share, one-vote principle", Glass Lewis said in a blog post, though it conceded that extra voting rights could lead to a more stable shareholder structure.

The proxy adviser also expressed reservations over another key plank of the bill, which gives investors a bigger say over the conditions under which a company's outgoing board presents a list of candidates for the next mandate.

Under the bill, the outgoing board's list will need approval by at least two-thirds of directors, which critics say could give minority shareholders veto powers.

The legislation also introduces a second vote on individual candidates once the board's list is successful, which professional investors say is an unnecessary complication.

"The procedures included in the proposed bill seem to further complicate voting for investors," according to Glass Lewis.

"For example, it is unclear how proxy voting cards will be structured to allow for the envisioned additional individual vote on board nominees if their slate receives the majority of votes."

(Reporting by Elvira Pollina and Giuseppe Fonte; Editing by Valentina Za and Andrea Ricci)