ROME - Italy's government has ruled that China's Sinochem cannot designate the chief executive of tyremaker Pirelli despite being its main shareholder with a 37% stake, a source familiar with the matter told Reuters on Saturday.

The decision is part of the measures announced this week by Rome's right-wing administration to shield the autonomy of Pirelli and its management.

Sinochem and Pirelli declined to comment.

Rome's move came after Sinochem notified the Italian government in March of plans to renew and update an existing shareholder pact with fellow investor Camfin, the vehicle of Pirelli's CEO Marco Tronchetti Provera.

Prime Minister Giorgia Meloni's administration scrutinised the pact under "Golden Power" rules aimed at protecting assets deemed strategic for the country, at a time when relations between China and Western countries have become more strained.

Asking not to be named due to the sensitivity of the matter, the source said Rome had ruled that only Camfin could indicate CEO candidates for Pirelli.

Under the revised pact between Camfim and Sinochem, which will now need to be amended to reflect the government's steps, Tronchetti Provera would lose from 2026 powers he currently enjoys to designate the group's CEO, leaving that task to Pirelli's Chinese-controlled board.

Rome also ruled Sinochem should pick no more than eight members of Pirelli's 15-strong board, leaving four to Camfin. The proposed pact would have given Sinochem an extra director and left three to Camfin.

Announcing the remedy on Friday, the government said that "some" strategic decisions by Pirelli's board would require approval from at least 80% of its directors.

Pirelli shareholders vote to pick a new board on July 31, with current deputy CEO Giorgio Bruno set to replace Tronchetti Provera, who would stay on as executive vice-chairman.

Camfin, which has options to buy a further 4.6% of Pirelli, earlier this year signed a separate shareholder agreement with Italian brakes maker Brembo, which owns a 6% stake in the tyremaker.

Analysts see the move as an initial step to build an alternative and stable group of Italian shareholders for the company.

(Reporting by Giuseppe Fonte; Additional reporting by Valentina Za and Giulio Piovaccari in Milan, Editing by Louise Heavens)