Italy probing ‘possible breach’ of Pirelli governance rules by Sinochem

Milan, Italy – The Italian government has launched a procedure against China National Tire & Rubber Corp. (CNRC), part of the larger Chinese state-owned group Sinochem, for possible breach of Pirelli’s governance rules.

In a statement 6 Nov, Pirelli said that the government would be investigating the breach of the ‘golden power’ decree, issued in June last year to restrict Sinochem’s influence over the tire maker.

In particular, it said, the procedure will look into the potential breach of measures that had been placed to guarantee the “absence of organisational-functional links” between Pirelli and CNRC.

Launched 30 Oct, the process has a 120-day period for conclusion, according to the statement.

Stated Pirelli: CNRC “maintains to have always respected the measures of the golden power and is confident that it will clarify its position during the procedure.”

Under the 'golden power' rule, the government can impose conditions or veto transactions, investments or corporate resolutions that could threaten Italian public interests.

The rule also stipulates that Sinochem cannot designate the chief executive of the tire maker, despite being Pirelli’s biggest shareholder. (ERJ report).

Sinochem, through CNRC, is Pirelli’s largest shareholder with 37% stake in the company, followed by Camfin, an investment vehicle of Marco Trochetti Provera, that owns a 25.7% share in the tire maker.