Enshrining Corporate Governance in Your Business Plan
The strengthening of corporate governance has been identified as an important growth factor for businesses internationally. A greater focus on corporate governance has also been enshrined in recent legislation, particularly by the Italian government.
We speak with Fausto de Angelis on why this aspect of business is crucial for entrepreneurs and how it can best be included as part of a company’s strategy.
Can you give us a brief summary of the current corporate governance climate in Italy and significant trends that you are seeing?
In my experience of providing legal business advice to SMEs, I am seeing how greatly corporate governance is growing in terms of importance as a “key success factor” in company strategy.
Why do you think corporate governance is now being recognised as an important driver of business success?
More people are now coming to realise that sustainable growth and ESG are crucial concepts for the strategic agenda of any company that aims to develop its business and increase its market share. The building of a strong and effective corporate model has clearly become one of the most fundamental parameters for measuring a company’s competitive advantage and sustainable growth prospects.
What other trends do you expect to see developing in the corporate governance climate?
I see some other trends which, to certain extent, can also be seen as connected with corporate governance and which can be used as a booster to speed up their implementation within organisations. Hot areas at the moment include legal design, cybersecurity, artificial intelligence and fintech.
How has the adoption of the Italian Corporate Governance Code 2020 affected SMEs and larger organisations?
With the introduction of the Corporate Governance Reform in 2020 there is certainly much more of a focus among entrepreneurs on making sure corporate and organisational structure is sustainable and adequate to serve their business model. There is no doubt that the Reform represents a significant driver of change towards the strengthening of competences and tools in this side of business.
Sustainable growth and ESG are crucial concepts for the strategic agenda of any company
Have there been any other legislative developments regarding corporate governance in your jurisdiction?
Over the last few years in Italy I have seen a much greater effort by businesses to achieve compliance with Law 231, which has imposed the use of internal control systems and risk assessments to address the criminal liability of companies.
Do you have any predictions for how this space might develop in the coming years?
It is always difficult to make predictions in such an unstable and changeable global business environment. I certainly see that in the future, legislators will be more committed to creating laws and regulations to prevent crises for companies rather than just inflicting sanctions. This is a significant evolution of business culture, at least for Italy.
Why do you believe there should be a greater emphasis on corporate governance as part of companies’ business plans?
A clear strategy for the development of corporate governance can bring tangible benefits to entrepreneurs, especially when they lead multiple businesses. Some of the advantages to be gained range from the clear identification of these various businesses in the right “boxes” to a more efficient asset allocation process, up to the creation of synergies and scale economies.
What steps should a company take to implement strong governance at the centre of its corporate structure?
The first step should be to set the “tone at the top” in the sense that it is essential for a leading entrepreneur to enshrine corporate governance as a part of their company’s strategic plan equal to its business objectives. With this approach, entrepreneurs can ensure sufficient engagement of management teams and sufficient focus on the strategy’s company-wide implementation.
A clear strategy for the development of corporate governance can bring tangible benefits to entrepreneurs, especially when they lead multiple businesses.
Regarding that implementation, are there any crucial things that the management team should watch out for?
In my eyes, one of the top priorities for any senior leadership team remains to develop a culture of leading by example – inspiring their organisations by doing business with integrity and making sure their corporate values are reflected in the execution of their strategy.
What role can general counsel play in this?
GCs, when present, can certainly become key “change agents” within the company and can support the leadership group in ensuring effective implementation of corporate governance.
What forms of support can they offer?
Besides the pure legal support that they can provide, I believe that there is a great opportunity for GCs to make a meaningful difference through strategy planning and change management (including cultural change).
What major pitfalls should be avoided as part of this process?
The cementing of greater and stronger corporate governance requires that the right strategy be put in place and developed using the right skills. It can be common to encounter serious challenges when such strategies are not well positioned by the senior management, or when the right talents are not invested in the project.
What are the “right skills” that a project like this will require?
From this point forwards for GCs, I foresee that “soft skills” will have a much greater impact on their roles. This is something that, at least in Italy, helps to more effectively facilitate the career development of in-house counsel.
How can employees with these skills be identified and used to the greatest effect?
When I give training on business law, I always stress the importance of certain aspects in order to identify the right resources and skills. For example, I believe that cross-functional development, positive “contamination” with different and complementary skills, and multi-jurisdictional expertise are always valuable features for a professional.
Fuasto de Angelis, Founder
Via Giuseppe Garibaldi, 55/D, 21020 Buguggiate VA, Italy
Tel: +39 335-640-2404
Fausto De Angelis is the founding partner of FdA Law Firm – Legal Services in Business Law. He is a business lawyer with an extensive international background acquired during his career as head of legal in various multinational companies. With more than 25 years of experience in negotiations, restructuring of operations and achievement of cross-border deals, he is a highly sought-after partner for large companies and SMEs which intend to start new businesses abroad or to strengthen their presence in the emerging markets. He also offers clients his managerial and entrepreneurial skills as part of his legal business advisory.