The decision is part of measures announced by Italy's government to protect the company's independence.
Citing national security concerns, Italy has blocked China's Sinochem from extending its control of tyre maker Pirelli.
Beijing-controlled chemical giant Sinochem is Pirelli's biggest shareholder, with a 37 per cent stake in the 151-year-old Milan-based firm.
The new restrictions imposed by Prime Minister Giorgia Meloni's government will prevent it from appointing a CEO or pushing through strategic policy decisions.
The government noted concerns about access to sensitive technology, saying: "Risks associated with it require structural safeguards that go beyond the temporary nature of the shareholders' agreement."
It comes as tensions between Beijing and the West are in focus as the US secretary of state visits China.