The successful takeover bid by Monte dei Paschi di Siena (MPS) for Mediobanca is a landmark event in Italian corporate history. While offering lessons for corporate governance in Delaware and the U.S. generally, it sheds new light on an old question: Can Italy ever have true public companies – firms with dispersed ownership where control is not concentrated in the hands of one shareholder or a tight-knit group bound by a shareholder agreement? Such companies have always been rare in Italy, and even when they emerge, with very few exceptions, they do not last long before becoming targets of acquisition.

Mediobanca itself stood as an example of a genuine public company. But briefly. After just a few years since the shareholder agreement cementing joint control in Mediobanca in the hands of various well-connected players, two major investor – Caltagirone and Delfin (the holding company of the Del Vecchio family) – built up significant stakes. The European Central Bank acted as a curb on their rise, restricting further growth because they were non-financial investors. Yet, when in January 2025, MPS, whose shareholder base included those same investors, launched its takeover offer, regulators could not object.

The contest came to a head at Mediobanca’s extraordinary shareholders’ meeting in August 2024. Management had proposed acquiring Banca Generali, both to build a powerful asset management group and to obtain a collective judgment over the merits of MPS’s offer. But the proposal was voted down – with the decisive opposition and abstention, respectively, of Caltagirone and Delfin, despite the fact that, as shareholders of MPS, they were both in a glaring conflict of interest. Italian corporate law, however, does not bar conflicted shareholders from voting, nor does it require abstaining shareholders to disclose their conflict. Had such disclosure been mandatory, Delfin’s abstention would not have counted for quorum purposes, and the proposal would have passed.

The transaction was also shaped by politics. The Italian government, still a shareholder in MPS, openly supported its bid. Whether it also exerted pressure on the relevant players is irrelevant. Many Mediobanca investors preferred to sell their shares on the market or abstain rather than risk alienating a government so visibly invested in the outcome by voting in favor of the Banca Generali acquisition. This is only the latest reminder that in Italy political influence over corporate ownership structures remains pervasive.

Two structural conditions are required for public companies to thrive. First, corporate law must effectively prevent insiders from extracting private benefits of control – particularly through rigorous rules on conflicts of interest. Without this safeguard, any company with dispersed ownership is unlikely to stay that way for long. Control is too valuable not to be seized, and those already in control will be reluctant to hand it over to the market – whether by accepting dilution in a capital increase or by selling shares in a public offering – since that would mean giving up the premium attached to control itself.

Second, the government must respect private property and refrain from arbitrarily intervening to reshape ownership structures or bend companies to their political will. In the absence of this condition, companies can defend themselves from political pressure much more effectively if they have a controlling shareholder. Politicians find it easier to strike deals with a stable bloc of owners – agreeing, for example, not to impose tariffs on vital imports in return for promises of campaign contributions – because they can rely on those owners still being there to deliver years down the road. By contrast, with dispersed ownership, the state would have to negotiate with the CEO, who may well be gone when the time comes to repay the favor. That, in essence, was the role of Mediobanca in its heyday: shoring up family control at large Italian private businesses via crossholdings and shareholder agreements to protect them from the predatory politics of the period known as the First Republic (1946-1993).

Still today, Italy doesn’t score well on either count. To be sure, since 2011 conflicts of interest within the boardroom, at least on paper, are reasonably well regulated. Mediobanca’s transition to a dispersed ownership structure is itself tied to this body of rules: As Luigi Zingales noted at the time in an op-ed, Mediobanca became a public company – shedding its equity stakes in major listed firms and shrinking the shareholder agreement that had long protected Mediobanca itself from takeovers to a token remnant – immediately after the first case of strict enforcement of the new conflicts of interest rules. With such rules in place, Mediobanca could hardly have continued its core investment banking business while simultaneously being a related party to so many companies.

Yet, controlling shareholder conflicts within the general meeting are hardly regulated, as the outcome of the recent Mediobanca shareholder meeting illustrates. And politics continues to loom large over corporate ownership. The Government’s inclination to use its broad powers to block mergers and acquisitions based on national security concerns is only the formal manifestation of its ever more assertive meddling with market dynamics.

Without both stronger legal constraints on private benefits of control and a political environment that resists interventionist temptations, dispersed ownership will remain a fleeting exception. The Mediobanca case illustrates this reality vividly: Where corporate law is lax and politics intrusive, ownership swiftly reconcentrates, often with the state’s blessing if not active support. The consequence is clear: Despite progress, Italy’s equity markets cannot fully perform one of their essential functions – facilitating firm growth and fostering managerial professionalism through the separation of ownership and control.

Italy’s experience holds lessons beyond its borders. Delaware recently amended its rulebook to relax rules on controlling shareholder conflicts (and so, incidentally, did the UK), while in the U.S. the Trump administration has hardly, to put it mildly, kept government at arm’s length from corporate America. If Italy teaches anything, it is that once the lines between politics, ownership, and corporate governance blur and minority protection is relaxed, the prospects for true public companies (already gradually displaced at the IPO stage by the rise of dual-class structures) quickly diminish.

This post comes to us from Luca Enriques, a professor of business law at Bocconi University. It is an adapted translation (with the help of ChatGPT) of an op-ed published in the Italian daily, Il Domani,available (behind a paywall) here. A version of this post appeared in the Oxford Business Law Blog, here.