Evolution of corporate governance control in manufacturing firms

Corporate governance problem exists because of separation between property and control; the presence of an organ capable to take control in company administration and management is essential to protect the property. The historical institution that took care of control in corporate governance in Italy is Collegio Sindacale; over the years it underwent several modifications, reflecting the evolution of dominant interests. Since nineteenth century Collegio Sindacale members duties and responsibilities have been overturned: from a substantial control duty to a sheer control of legitimacy. The first form of accounting control dates from 1600, with the Indian Oriental Company, whereas first signs of Collegio Sindacale can be found in 1882 Code of Commerce. With the change from Code of Commerce to the civil code in 1942 this institution kept its original characteristics assimilating, however, the special legislation of 1936 – 37 where the competence and independence level of the committee member had been increased. Since 1942 to 1974 several official project for a reform of the company law were proposed, but only Marchetti project (1973) was converted into law, proposing an external accounting verification for big companies and officializing auditors. In 1992 the VIII CEE direction about company law was put in effect, introducing further novelties and requiring that Collegio sindacale’s members are selected between the ones enrolled in the auditor’s register of Minister of Justice. The “decreto Draghi” (1998) introduced innovation into the Collegio Sindacale functions for stock companies: ccountability control, fully carried out by external auditors, were separated from administrative and legality controls, carried out by Collegio Sindacale. This new law introduced many modifications in the Collegio Sindacale conduct, so that also the “conduct’s principles” of 1995 was revised, considering CONSOB directions, as for Regolamento Emittenti (14 may 1999) . Finally, the role of sindaco was decreased mainly for two novelties in 2003 and 2004: - the accountability control was removed from Collegio Sindacale duties and was granted to external auditors for companies that must draw up a consolidated balance sheet; - the duties of Collegio Sindacale were limited to the supervision of law and statute, the correct administration control and the company accounting and organizational assets control. Latest novelties are found in the law for savings protection (2005), and mainly: - in addition to shareholder’s meeting, Collegio Sindacale could ask responsibility action toward administrators; - before accepting a new task, Collegio sindacale’s members must inform shareholders meeting for administration and control task in other companies.