Board Structure and Auditors: The Italian Experiment and Lessons for the Future

1. Board Structure and Auditors: The Italian Experiment and Lessons for the Future BIICL, London – 19 November 2004 Marco Ventoruzzo - Università L. Bocconi, Italy

2. collegio sindacale commissaires aux comptes board of auditors auditores conseil d'administration consiglio di amministrazione consejo de administradores board of directors auditor assemblees d'actionnaires junta de accionistas assemblea degli azionisti shareholders' meeting

3. board of directors board of supervisors executive board Aufsichtsrat Vorstand shareholders' meeting Hauptversammlung

4. 2 models why only 2? let's make it 3!

5. board of directors audit committee shareholders' meeting

6. Directors’ Competences, Board Structure and Directors’ Liabilities • Broader competences, especially in the definition of the financial structure; • Role of non-executive directors; • Independent or Minority Directors? • Executive Chairman? • Conflicts of Interest and Related Parties; • Less Rigorous Civil Liabilities? "Codification" of Self-Regulation!

7. Internal Board of Auditors • Increased Independence Requirements; • Overlapping of competences between internal auditors and non-executive directors; • Increased Liability?

8. External Auditors • Competences confined to accounting and financial statements and economic aspects of financial transactions (LBOs; issuing price of shares…); • Deja-vu with some of the principles of the Sarbanes-Oxley Act; • Rotation and cooling off of organizations, but of individual professionals within the organizations? • Exchange of information with internal bodies: the need for more precise rules; • Clear rules concerning civil liabilities?

9. Broader Conclusions • Market for rules in the absence of effective regulatory competition is simply contractual freedom; • If more regulatory competition and freedom of movement for corporations and investments, more extensive harmonization is needed also in corporate governance issues; • Need for a stronger theoretical framework, at the European level, to distinguish what should be left to self-regulation and what should be left to statutes; • Enforcement mechanisms.