On the waiver agreements of the liability action against directors
In the sale and purchase agreements clauses by which the purchaser, who will assume the company’s control, undertakes not to vote in favour of the exercise of the liability action pursuant to Article 2393 of the Italian Civil Code, as well as not to bring any liability action against the resign...
Read
Multi-stakeholder enterprises according to the Italian benefit corporation legislation
The benefit corporation model The benefit corporation legislation, introduced by stability law 2016, and dedicated to corporations having among their purposes tha...
Read
Update on the news from the maritime and port labour world
Renewal of the National Collective Bargaining Agreement for shipping agencies’ executives On 13 February 2017 Manageritalia and Federagenti renewed the national collective bargaining agreement for executives of shipping agencies. The social partners involved in the renew...
Read
  • Press Clippings
  • Press Releases
  • Articles
  • Newsletter
16/03/2017

The Luxembourg Presidency of the EU Council of Ministers announced, on 7 December 2015, that it had reached an informal agreement with the European Parliament on the text of the proposed Directive on Network and Information Security Directive (‘the NIS Directive’). Once adopted, companies doing business in critical infrastructures, such as energy, transport, health and banking, will have to implement security measures and notify public authorities in cases of serious cyber incidents.
Rocco Panetta, Partner at NCTM Studio Legale, commented, “This last obligation seems to be the most innovative aspect, since currently, a large number of incidents do not reach the competent authorities, and go unnoticed. Should the proposed NIS Directive being approved, public authorities will be in a position to react, take the appropriate mitigating measures and set adequate strategic priorities. [Inadequacy in] security of network and information systems can compromise vital services and cause substantial financial losses for the EU economy, estimated in a range between €260 and €340 billion annually.”

The agreement was also welcomed by Andreas Schwab, member of the European Parliament (‘the Parliament’) and Rapporteur on the NIS Proposal, who told DataGuidance, “The EU becomes a common safe cyberspace in the offline and online world. Today a milestone has been achieved: for the first time, the NIS Directive introduces EU-wide cybersecurity rules, which the Parliament has asked for years. Member States (MSs) will now have to raise their resilience and capacities to a common level, and the Parliament has furthermore strongly pushed for a close, structured cooperation between them. This achievement is even more important in light of the current security situation in Europe.”

“Today a milestone has been achieved: for the first time, the NIS Directive introduces EU-wide cybersecurity rules.”

Although deeming the NIS Directive a big step in the development of a culture of risk management, Panetta noted, “We [still] have to wait for the final approval of EU institutions and the subsequent implementation in the legal framework by each MS, as the NIS Directive contains some ambiguous provisions and equivocal definitions. [In fact, it establishes that] only incidents that seriously compromise ‘the operation of network and information systems and thus having a significant impact on the continuity of services and supply of goods which rely on network and information systems’ will need to be reported to the national competent authority, and this is likely to require organisations to implement a level of capability deemed ‘appropriate’ to the risks that they face. [However,] neither the term ‘appropriate’ nor ‘incidents of significant impact’ are defined in detail by the NIS Directive.”

The provisionally agreed text will now need the formal approval by the Internal Market Committee and the Committee of Permanent Representatives, the latter likely to be sought on 18 December 2015. It will then require the formal approval of the Council of the European Union and the Parliament.

16/03/2017

Nctm Studio Legale advised BT Enìa Telecomunicazioni S.p.A., a company controlled by BT Italia S.p.A., in the purchase of a line of business relating to a telecommunication network extending for approx. 1,500 km in Emilia Romagna belonging to IRETI S.p.A. (a company of the IREN Group engaged in the field of public local grid services), which was advised by Studio Bettini Formigaro Pericu.

At the same time, an agreement was entered into between BT Enìa and IRETI, whereby the latter was granted the right to use, for a period of 30 years, renewable by further 10 years, 25% of the overall capacity of the purchased network; furthermore BT Enìa entered into an agreement with IREN Energia S.p.A. (another company of the IREN Group) whereby IREN Energia granted BT Enìa the right to use 25% of the physical space existing inside all service cable ducts of the district heating network owned by IREN Energia, for a period of 30 years, renewable by further 10 years .

22/11/2016

With the removal of sanctions against Iran, it has become immediately clear that Italian companies would soon take steps to restore their relationships with a country that historically has always been one of the key trading partners of Italy.

Nctm Studio Legale has from the very first moment been prompted by clients to assist them in restoring their relations with Iranian enterprises.

We resumed our old contacts, not only with Iranian lawyers but also with local institutions and businessmen, many of our professionals went to Iran in the last few months and we found a country that is strongly different from how international media paint it: a country with an age-old history, with contemporary artistic excellences renowned at global level.

These long years of sanctions have not dragged down the Iranian economy: Iran has gone ahead, has developed a self-sufficient economy. Its traditional European partners have been replaced by Asian enterprises and the technological level of the local industry is, in spite of all difficulties, surprisingly high.

We found people of high culture wishing to gain back their position in the international legal and business community, especially among the young, those who have grown up professionally with sanctions in place.

Nctm has opted to focus precisely on those young people, who tend to be more open to new experiences.

Emad Tabatabaei, a 36-year-old Iranian lawyer joined Nctm Studio Legale as an of counsel in the summer of 2016. He shares his time across Germany, Milan and Tehran.

At the same time, we reached a strategic cooperation agreement with Tehran’s Hirbod International Law Office (HILO), which is capable of providing all-round legal assistance to foreign enterprises wishing to expand their trade in Iran and, namely, with 37-year-old partner Amir Rahimi.

There is plenty of enthusiasm surrounding this project. We are very excited at contributing our expertise as an international European law firm and at facing such a peculiar and sophisticated context as the Iranian one.

If – as we hope – the uncertainty that still exists is successfully removed, our intention is to further tighten our relationships with HILO and establish a direct presence in Tehran.

16/05/2017

In the sale and purchase agreements clauses by which the purchaser, who will assume the company’s control, undertakes not to vote in favour of the exercise of the liability action pursuant to Article 2393 of the Italian Civil Code, as well as not to bring any liability action against the resigning directors pursuant to Articles 2393-bis and 2395 of the Italian Civil Code, are widely used. However, the possible translation of such provision into the shareholders’ resolution held by the new majority shareholder immediately after the transfer of the controlling shareholding is still an open issue.

The agreements by which the purchaser undertakes to indemnify and keep harmless the resigning directors from any loss, damage or liability connected to the performance of their duties are also very common and used. Unlike the agreements above, these latter do not exclude that a liability action could be brought, neither discharge the resigning director, but they transfer the risk related to the consequences of a positive assessment of the director’s liability – both contractual and extra-contractual – to the person granting full discharge.

These agreements, however, even though they are strictly connected with the agreements firstly mentioned, do not constitute part of the present article and they will be dealt with separately.

Going back to the agreements by which the directors are fully discharged from their liabilities, the scope is that to preserve the economic balance reached by the parties by means of the so-called representations and warranties; the aim is, in fact, to avoid that the purchaser could get the dual advantage of the indemnity and of the reintegration of the corporate capital by bringing a liability action against the directors.

We deem appropriate to deal with the matter of the present article, not only because it is in the practice’s interest, but also because it is subject to recent evaluations in the jurisprudential and doctrinal debate.

This matter, however, shall be dealt with care considering that jurisprudence and doctrine have held very different positions over the years.

The starting point of the recognition it is represented by Article 2393, paragraph 6 of the Italian Civil Code, which provides that, through a shareholders’ meeting’s resolution, the company might give up to bring a liability action unless a minority of shareholders representing at least 1/5 of the corporate capital, or the different percentage provided by the company’s by-laws for the exercise of the liability action itself, would make opposition to the such waiver.

Contrary to the recognition of the legitimacy of the waiver agreements the jurisprudence which, starting from the nineties [see Supreme Cassation Court, on 27 July 1994, no. 7030], has ascertained the invalidity of such agreements due to the breach of the company’s interest (in other words the interest of the company to get the indemnity for the benefit of its corporate capital) and the contrariety to the purposes according to the mandatory provisions of law.

In subsequent time this interpretation consolidated so much that the Supreme Cassation Court [Supreme Cassation Court, on 28 April 2010, no. 10215] expressly stated the invalidity of such agreements due to an object (the performance relating to the waiver of the liability action) or common reasons unlawful since the agreement was concluded in the only interest of the shareholders and to the detriment of the company’s interest.

The Milan Court too has declared itself in favour of the legitimacy of the above mentioned jurisprudence [Milan Court, on 16 June 2014, no. 7946]. It has declared in fact the invalidity of the waiver agreements observing that, in the debated matter, the obligation not to exercise the action was substantially equal to the waiver of the liability action, insofar the company exercising that action would have lost, through the merger of the buying Company, any interest to proceed while contemporarily obliged not to bring the liability action itself.

The doctrine too, even though in a different way than the jurisprudence, has many times affirmed the invalidity of the above mentioned agreements. According to a first view, the commitment taken by the shareholder towards the concerned director is invalid because the conflicting issue should be in charge of the promising part making this commitment breaching the mandatory substance of the rule [C. Cottino, Le convenzioni di voto nelle società commerciali, Milan, 1958, p. 247].

Another doctrine [G. Oppo, Le convenzioni parasociali tra diritti delle obbligazioni e diritto delle società, in Riv. dir. civ., 1987, p. 517] moves from the need to respect the collaborating reason that justifies the existence of the company itself, thus considering invalid any pact aiming at operating against the company’s interest.

A third doctrine deems invalid all the clauses releasing directors from their responsibilities even in case of a slight negligence, providing the mandatory nature of Article 2392 of the Italian Civil Code, making reference to the provisions of Article 1229 of the Italian Civil Code and to the nature of public order of the provisions regarding the directors’ responsibilities as they are established to guarantee third parties [G.A. Rescio, Convenzioni di voto: note a margine di recenti provvedimenti, in Riv. dir. priv., 1996, p. 122 ss.].

All these theories, nevertheless, do not exhaust the issue of the agreements for the waiver of the liability actions, as jurisprudence and doctrine have also created theories that are in favour of such agreements.

The jurisprudence itself [Milan Court, on 10 February 2000] has stated that the resolution on the waiver of the liability action might release the directors from their responsibility provided that it includes a specific and clear determination of the administrative acts which could lead to an indemnity claim.

Rome Court [Rome Court, on 28 September 2015, no. 19193] was coherent with the above mentioned statement as, opposite to what affirmed the previous year by Milan Court [Milan Court, on 16 June 2014, no. 7946], it admitted the validity of the agreements through which shareholders undertake not to bring any liability action against the outgoing directors after the termination of their office. In this case the Court has only admitted the invalidity of the agreements which provide for the pre-emptive waiver of the liability action against any kind of conduct taken by the outgoing directors during their office.

These views have also been shared by the doctrine that has affirmed the validity of the above mentioned agreements based on the legitimacy of the commitment to take actions or keep conducts that, by themselves, can result from free determinations concerning patrimonial assets and it being absent any mandatory rule which they might be inconsistent with [B. Visentini, I sindacati di voto: realtà e prospettive, in Riv. soc., 1988, p. 15 ss.; A. Tina, L’esonero da responsabilità degli amministratori di s.p.a., Milano, 2008, p. 325 ss.].

The doctrine has also affirmed that the waiver, besides being expressed, must have a well identified content. According also to the view of the “possibilist” jurisprudence, the resolution for the waiver shall indicate specific actions or violations from which indemnity claims could raise; in fact only in this way the object of the waiver would be determinate or determinable (Article 1346 of the Italian Civil Code) and the shareholders’ meeting would be in the position to take an aware evaluation of the waiver [F. Bonelli, Gli amministratori di s.p.a., Milano, p. 197].

A broader view on this matter has been taken by the most recent doctrine; in particular, the doctrine has deemed appropriate to distinguish between rules that regulate relations between directors and the company and rules that regulate the responsibility vis-à-vis company’s creditors, as the first ones aim at protecting the corporate capital, thus granting the shareholders community’s interests, while the second ones protect creditors’ and third parties’ interests [A. Picciau, Sulla validità dei patti parasociali di rinunzia all’azione di responsabilità e di manleva nelle s.p.a., in Riv. soc., 2016, p. 301 ss.].

According to this latter position, it seems consistent with the complex of rules established by the legislator to admit that Article 2393 of the Italian Civil Code, which regulates the relations between the managing body and the company, can be derogated, while the issue of the responsibility towards third parties and creditors is regulated in a specific and different way by Article 2394 of the Italian Civil Code [A. Picciau, loc. cit., p. 307].

As far as the legitimacy of the waiver is concerned, according to the rules of procedure provided by Article 2393 of the Italian Civil Code regarding the matter of the liability, the doctrine itself [widely on this point, A. Picciau, loc. cit., p. 304 ss.] disagree with the strict views of the jurisprudence. These latter acknowledged mandatory nature to those rules and looked at the above mentioned waiver agreement as a their violation. In fact the law, when providing the shareholders with the right to dispose of the indemnity, through the waiver or an agreement on the liability action, would clearly indicate that those rules are not established to guarantee general interests but to protect the interest of the shareholders community.

In light of all the above, it seems clear that doctrine and jurisprudence have not developed yet a consistent orientation with respect to the subject matter of the present article; however, as it is demonstrated by the “possibilist” jurisprudence and by the most recent doctrine, a broader view affirming the validity of the waiver agreements of the liability action against directors has been increasingly developing.

 

 

The contents of this article is meant for informative purposes only and cannot be considered as professional advice. For further information please contact articoliM&A@nctm.it

 

16/05/2017

With the Legislative Decree no. 254 of December 30, 2016 (the “Legislative Decree“), implementing Directive 2014/95/EU, has been introduced in Italy the new regulation on public disclosure of non-financial information, applicable from the financial year commencing on 1st January 2017.

The Legislative Decree is addressed and applicable to public interest entities (as listed and defined under Article 16 of Legislative Decree 39/2010) which have, on an individual or consolidated basis, during the financial year, an average number of employees greater than 500 and which, at the end of the financial year, have exceeded (with respect to individual or consolidated data) at least one of the following limits: (a) total net asset value: euro 20,000,000; and (b) total net income from sales and services: Euro 40,000,000. However, the obligation to draw up and publish the individual non-financial statement does not fall within the scope of the public interest entities which, while exceeding the limits above on an individual basis: (i) are also required to draw up and publish the consolidated statement; and (ii) are included in the non-financial statement prepared by their parent company.

For the sake of clarity, article 16 of Legislative Decree 39/2010, as amended by Legislative Decree 135/2016, defines entities of public interest such as: (a) Italian companies issuing securities admitted to trading on regulated Italian and European markets; (b) banks; (c) insurance companies referred to in article 1, par. 1, letter (u) of the Private Insurance Code; and (d) the reinsurance companies referred to in article 1, par. 1, letter (c) of the Private Insurance Code, with registered office in Italy, and the administrative offices (sedi secondarie) in Italy of non-Community reinsurance companies referred to in article 1, par. 1, letter cc-ter) of the Private Insurance Code.

The discipline introduced by the Legislative Decree provides that the relevant public interest entities shall draw up, for each financial year, a statement aimed at providing the public with a correct information on the business activity, its performance, its results and its impact on energy, environmental, social and employment aspects, as well as on those regarding human rights and anti-corruption both active and passive. The non-financial statement shall describe, inter alia, the principal risks incurred or suffered in connection with the aforementioned aspects, as well as the business model for managing and organizing the business activities and the policies applied and the actions taken to manage such risks. Non-financial information is provided by comparison with those provided in the previous financial years, referring, where appropriate, to the items and amounts contained in the financial statements. In the event that a public interest entity is required to publish a non-financial statement on a consolidated basis, the non-financial statement shall refer to the group as a whole, including the parent company and entirely consolidated subsidiaries.

In cases where public interest entities do not pursue policies with respect to one or more aspect among those listed above, such public interest entities will be required to explain the justification for such choice in a clear and structured manner. In exceptional cases, by means of a justified resolution of the board of directors, having consulted the supervisory body, the non-financial statement may omit information on imminent developments and transactions, if their disclosure could compromise the commercial strategy of the entity. It is understood that if a public interest entity avails itself of such choice, it must state it in the non-financial statement.

From the point of view of the corporate bodies involved in the drafting of the non-financial statement and its approval procedure, the similarities with the regulation concerning financial statements are numerous and the non-financial statement can, in fact, be included in the management report that accompanies the consolidated or non-consolidated financial statements (and, in that case, constitutes a specific section of the same) or can constitute a separate report.

With reference, first of all, to the corporate bodies involved in drafting and approving the non-financial statement, the Legislative Decree entrusts the members of the management body of the public interest entity with the responsibility of drafting the non-financial statement. The board of statutory auditors, on the other hand, is required to monitor the compliance of the non-financial statement with the provisions of the Legislative Decree and to report it in the annual report to the shareholders’ meeting. The person in charge of the legal audit of the financial statements (or other legal auditor specially designated) verifies that the non-financial statement has been prepared and expresses, with a special report different from the one regarding the financial statements, a certificate of compliance of the information provided in respect of the provisions of the Legislative Decree.

As far as concerns, on the other hand, the procedure for the approval of the non-financial statement, the Legislative Decree provides that, within the same time limits set forth with reference to the financial statements, the non-financial statement approved by the managing body must be made available to the board of statutory auditors and to the legal auditor and then deposited in the company’s register by the directors, jointly with the management report.

Upon occurrence of a breach of the provisions under Legislative Decree (i.e. in the case of omitted deposit of the non-financial statement, of non-compliance of the same with the provisions of the Legislative Decree or in the case the same provides untrue information or omits relevant information) penalties are provided on the persons involved in the process of drafting the non-financial statement and, therefore, on directors, members of the board of statutory auditors and on the legal auditors, which vary between Euro 20,000 and Euro 150,000. The public authority responsible for investigating and disposing of such penalties is Consob and the sanctioning procedure referred to in Articles 194-bis, 195, 195-bis and 196-bis of the Consolidated Financial Act applies.

 

 

The contents of this article are meant for informative purposes only and cannot be considered as professional advice. For further information please contact articoliMF@nctm.it

 

16/05/2017

On April 24th, 2017, the Italian Government enacted the Law Decree n. 50/2017 that introduces a new

tax regime applicable to “carried interest”, i.e. the share to the profit of an investment earned by managers of undertaking for collective investments and more generally by employees/directors of companies.

The new rules provide that the income realized by managers/employees in relation to carried interest embedded into units of undertaking for collective investments (“UCIs”) or shares/financial instruments of companies qualifies as financial income (in principle subject to 26% substitute tax).

The new regime applies to carried interests deriving from the participation to companies, entities or UCIs resident or established in the Italian territory or in States that allow an adequate exchange of information.

Conditions of applicability
In particular, the carried interest regime applies to the income deriving from the direct or indirect participation in companies and UCIs, earned by employees and directors of such companies/UCIs (or of any other entity controlling such companies or managing the UCIs) and relating to units, shares and other financial instruments embedding economic returns higher than the ordinary ones (the “Preferred Financial Instruments“), provided that the following conditions are met:

  1. the actual commitment in the UCI of all the employees/directors entitled to the carry interest is equal, at least, to (i) 1% of the overall investment carried out by the UCI or (ii) 1% of the net equity value of companies or other entities issuing the Preferred Financial Instruments. The 1% minimum commitment is determined by computing also the amount invested in ordinary units or shares (i.e. financial instruments having the same economic rights of all the other investors/shareholders), as well as the amount, if any, taxed as employment income in the hands of the employees/directors upon subscription of the shares or quotas (or that would have been taxed in Italy if the employees/managers had been Italian tax residents);
  2. the carried interest, i.e. the higher return embedded in the Preferred Financial Instruments, is paid to employees/directors only   after   the    repayment    of    the    invested    capital    contributed    by    all    the investors/shareholders plus the agreed-upon minimum yield of return (“hurdle rate”) provided for by  the by-laws or the internal rules of the UCI. In case of change of control, the carried interest accrues upon the condition that the other investors/shareholders realize a consideration for the sale at least equal to the invested capital plus the hurdle rate;
  3. the Preferred Financial Instruments are held by the employees/directors (or, in case of death, by their heirs) for a period of at least 5 years, or until the date of change of control (that should also include the liquidation event) or substitution of the management company if such events occur prior than the five-years period.

Entry into force
The new provisions apply to the income from the Preferred Financial Instruments received from the date of   entry into force of the Law Decree. The Law Decree has entered into force on April 24 2017 and it must be converted into law within 60 days (i.e. within June 23rd, 2017), otherwise it will decay. At the moment, the Decree is under examination at the Parliament, which can amend or abolish, during the conversion procedure, the current version of the new provisions.

For any other information or clarification about the new tax regime do not hesitate to contact Barbara Aloisi b.aloisi@nctm.it or Andrea Mantellini a.mantellini@nctm.it

28/04/2017

Judgment No. 4205 of 3 March 2016 of the Supreme Court, Second Division, gives us the opportunity to provide a brief overview of the different opinions expressed by courts and legal commentators regarding the possibility to waive the termination effect of a notice to perform.

  1. The subject at issue

If, in a contract involving mutual obligations, a party fails to perform the obligation it is required to perform, the non-defaulting party may seek performance by court order or enforce its termination right. Termination for non-performance can occur either by court order or “by operation of law”. Termination by operation of law occurs without having to apply for a declaratory court ruling. Amongst the cases of termination by operation of law expressly regulated by the Italian Civil Code, is the case of a notice to perform whereby a creditor urges a debtor to perform its debt within a reasonable period, with the warning that, otherwise, the contract shall be terminated. Notice to perform is regulated by Article 1454 of the Italian Civil Code, which provides as follows: “[I] Where a party fails to perform an obligation, the other party may serve on it written notice to do so within a reasonable time, stating that if, at the end of that period, the notice has not been complied with, the contract shall simply be considered terminated. [II] Such period may not be less than two weeks, unless the parties agree otherwise or a shorter period is sufficient by reason of the type of contract or common usage. [III] If the contract has not been performed within that period, it shall be terminated by operation of law.”. In this regard, the question has arisen of whether a non-defaulting party be entitled or not to waive the termination effect of a notice to perform, when the specified time expires without the contract having been performed. There is no unanimity of opinion on this issue amongst courts and scholars, as is briefly illustrated below.

2. The opinions of courts

In spite of the wording of Article 1454 of the Italian Civil Code, certain court precedents considered that the termination effect can be waived. It was argued, inter alia, that a notice to perform gives an option to the non-defaulting party in that, after the specified time expires without the contract having been performed, the notifying party may waive its effect – also by adopting a conduct implying an intent– (see Supreme Court, Second Division, No. 9317 of 9 May 2016). Furthermore, a notice to perform has a nature as a legal transaction, which means it cannot produce any effect against and beyond the willingness of its author, who can therefore opt for not enforcing the termination that has already occurred (see Supreme Court, Second Division, No. 23315 of 8 November 2007). If the notifying party files a court application, following the expiry of the time specified in the notice to perform, expressly and clearly emphasising that the specified time has expired without performance, asking the court to ascertain and declare termination of contract, the termination effect is related to such application (which would prevent a judge from declaring termination of contract automatically, in the absence of a specific application for that purpose, as a result of the expiry of the time specified in the notice to perform without performance): in that regard, the Supreme Court, Second Division, in judgment No. 4535 of 18 May 1987, stated that “the expression “terminated by operation of law” under Article 1454 of the Italian Civil Code means only that the relevant court decision has a mere nature of declaring termination, not that a judge can order termination automatically”. Remarkably, an opposite view was expressed by the Supreme Court en banc, by judgment No. 553 of 14 January 2009, stating that the waiver by the non-defaulting party of the termination effect is not admissible as such effect cannot be disposed of by the contracting party – as appears from the voluntas legit.

3. The opinion of legal commentators: the termination effect of a notice to perform cannot be disposed of

By contrast, according to the prevailing view of legal commentators, the notifying party is not entitled to waive termination which occurred by operation of law, by cancelling its effects, revoking it, by submitting a new notice to perform or having recourse to other protection remedies. Such view is based on the argument that, also when looking at the wording of Article 1454 of the Italian Civil Code, termination operates without a court action being necessary. In this regard, the necessity was underlined to defend the debtor, who is interested in the certainty of its position and relies on the impossibility of having to perform after the expiry of the specified time period.

4. Judgment No. 4205 of 3 March 2016 by the Supreme Court, Second Division

By judgment No. 4205/2016, the Supreme Court incidentally stated that, if the notifying party does not file a court application for termination by operation of law for non-performance within the time specified, but serves a new notice to perform, termination by operation of law shall occur only as a result of such latter notice (provided that it is valid). Service of a new notice to perform relates to the notifying party’s interest in the other party’s late performance, with a new time period being given for performance. This does not however exclude that non-performance is deemed to exist from the expiry of the time specified in the earlier notice to perform.

 

The content of this document is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For further information please contact your counsel or the following address: corporate.commercial@nctm.it

 

28/04/2017

Liability can be found, under Legislative Decree No. 31 of 2001, on the part of a holding company for offences committed in connection with the activities of its subsidiaries, provided that a) the person  acting on behalf of the holding company acts in concert with the person committing the offence on behalf of the controlled entity; and b) the holding company appears to have obtained a concrete advantage from, or pursued an actual interest by way of, the offence committed in the context of the subsidiary’s activity.

Supreme Criminal Court, Second Division, No. 52316 of 9 December 2016

1. The case at issue

The case on which the Court ruled is one of fraud designed and perpetrated by top managers of the Ilva Group (a renowned Italian iron-and-steel industry group belonging to the Riva family, who controls it through the family holding company, Riva Fire s.p.a.) with a view to obtaining State subsidies. More specifically, between 2008 and 2013, Ilva s.p.a. (the main operational company of the group), through a “financial cycle” involving Ilva s.a. (a Swiss company created ad hoc by the Riva family and only apparently operational), Eufintrade s.a. (a financial company colluded with the Ilva Group) and Banca Intesa (acting as an intermediary between Ilva s.p.a. and Simest s.p.a.), faked the grant of a credit facility in favour of foreign purchasers, which as a matter of fact was not granted, thus obtaining funds from the Italian Ministry of Public Development for Italian exporters eligible for such subsidies. In such a way, the Ilva Group managed to obtain, at the same time, immediate payment for products and the grant of State subsidies. In light of this, the managers of Ilva s.p.a., Ilva s.a., Eufintrade s.a. and Riva Fire s.p.a. were summoned to court under the charge of criminal conspiracy (under Article 416, paragraphs 1 and 2 of the Italian Criminal Code) and aggravated fraud for misappropriation of public funds (under Article 640-bis of the Italian Criminal Code), as was also Riva Fire s.p.a. under the charge of administrative liability arising from fraud, under Article 24, paragraphs 1 and 2 of Legislative Decree No. 231/2001. The first-instance proceedings ended with both the accused and the company being sentenced. The Court of Appeals then confirmed the first- instance judgment. The accused and the company challenged the judgment of appeal before the Supreme Court. As for the company, the grounds of appeal submitted related to, respectively: the first one, the possibility of recognising a predicate offence; the second one, the existence of an interest or advantage of the company; the third, the exclusion of the company’s liability in light of the adoption of the Organisational Model; and the fourth one, the preconditions for seizure. More specifically, in the second ground for appeal, the applicant argued that no liability could be alleged against Riva Fire s.p.a. as the fraud was committed in the interest and to the benefit of Ilva s.p.a. only. The Supreme Court dismissed the appeal on the ground that the contested conducts were adopted and resulted in advantage for Riva Fire s.p.a. too, whose top management was, moreover, the same as at Ilva s.p.a.

2. Administrative liability under Legislative Decree No. 231/2001 within groups of companies

Legislative Decree No. 231/2001 only regulates the case when an individual company is called to account for administrative wrongful acts. Nevertheless, there is no provision on groups of companies, a phenomenon which is, however, particularly significant. The “positive” effects of an offence may indeed impact on companies connected with, or related to, the one to which the wrongdoer belongs. As a further evidence of this, it should moreover be noted that a group’s liability can be found not only at the level of a “vertical” group but also at the level of a “horizontal” group (comprising multiple companies having equal roles) as well as in the context of contingent and temporary companies such as temporary groupings of undertakings and joint ventures. Though, under what conditions can a holding company be held liable in connection with the activity of a subsidiary? Earlier case law was of the opinion that the mere existence of a group’s interest, even if limited to a mere increase of the group’s profitability or value, be a necessary and sufficient condition for alleging administrative liability on the part of a holding company. This view was, however, a matter of controversy: indeed, if administrative liability is based on organisation negligence, no reproach can clearly be made in the absence of negligence on the part of the holding company. By the above judgment, the Supreme Court, definitively overturning the theory of the group’s interest, comes to a solution that appears to be more balanced and respectful of the law, linking the holding company’s liability for offences committed by a subsidiary in the context of the holding’s activity to two basic preconditions. The first precondition is that predicate offences should be committed by the subsidiary in complicity with at least one individual acting on behalf of the holding company, which means that a subjective link should exist between the wrongdoer, linked to the subsidiary, and the holding company. Such precondition is met, for example, when the wrongdoer is a director of both the subsidiary and the holding company or in any event has a managerial role in both companies (e.g. director in one company and CFO in the other one), or in the event that the member of the holding company, although being subjectively linked to the latter only, acted in concert with the member of the subsidiary, contributing to the offence under Article 110 of the Italian Criminal Code. The first precondition is that the offence should be committed also in the interest of the holding company: as already mentioned, the holding company’s interest or advantage cannot be a mere generic group’s interest in an increased profitability or value of the group, but rather a specific and actual interest.

 

This article is for information purposes only and is not intended as a professional opinion. For any further information, please contact your trusted legal advisor or send an email to: corporate.commercial@nctm.it

28/04/2017

By order No. 4 of 12 January 2017, the Italian Data Protection Authority set out the discipline on  personal data processing for marketing purposes, finding the unlawfulness of both the processing of  data collected through forms available on websites and the processing of data (namely, telephone numbers) autonomously collected on the Web.

Preamble

By order No. 4 of 12 January 2017, the Italian Data Protection Authority (hereinafter the “Authority”) ruled again on data processing for marketing purposes. Said decision involved a company engaged in the sector of IT services, which, through a form available on its website to be submitted for obtaining an estimate for its services, first collected and then processed customers’ data with a view to, inter alia, transmitting promotional material. From the Authority’s investigation it emerged that the customers’ data collected in such a way (which, in the majority of cases, concerned legal entities or other persons having a VAT number such as one- man businesses or liberal professionals) had been processed without first obtaining the specific consent of the parties concerned to the sending of automated promotional information. It was moreover ascertained that the company in question, with a view to acquiring new customers and promoting its services, contacted telephone numbers autonomously extracted from the contact section of the websites of the companies, liberal professionals and businessmen concerned, without giving any notice thereof or requesting any specific consent thereto. Before examining the Authority’s decisions as to the aforesaid types of processing, it is worth ascertaining to what extent the provisions of Legislative Decree No. 196/2003 (hereinafter the “Privacy Code”) apply to legal entities.

1. The protection afforded to legal entities under the Privacy Code

As is known, as a result of the amendments brought by Article 40, paragraph 2, a), of Decree Law No. 201 of 6 December 2011, converted with amendments into law No. 214 of 22 December 2011 (so-called “Salva Italia”), the processing of data on legal persons is, in the majority of cases, no longer subject to the Privacy Code rules. Exceptions to the general rule are however laid down in specific provisions on “unsolicited communication”. Article 130, paragraph 1, of the Privacy Code indeed provides as follows: “Without prejudice to Articles 8 and 21 of Legislative Decree No. 70 of 9 April 2003, the use of automated calling or communication systems without human intervention for the purposes of direct marketing or sending advertising materials, or else for carrying out market surveys or interactive business communication shall only be allowed with the subscriber’s or user’s consent”. Paragraph 2 in turn reads: “Paragraph 1 shall only apply to electronic communication by email, facsimile, MMS (Multimedia Messaging Service) or SMS (Short Message Service) or other means for the purposes referred to herein”. It is plain from the wording of such provision that the same applies to subscribers or users, and not to the parties concerned (i.e. the individuals to whom personal data relates). Article 4, paragraph 2, f) and g), of the Code defines, respectively, a subscriber as “a natural or legal person, body or association who or which is party to a contract with the provider of publicly available electronic communication services for the supply of such services, or is anyhow the recipient of such services by means of pre-paid cards” and a user as “a natural person using a publicly available electronic communication service for private or business purposes, without necessarily being a subscriber to such service”. So, whenever a legal entity acts as a subscriber – within the meaning specified above –, the processing of its data for the purpose of sending automated promotional communication shall only be allowed if its prior consent has been asked and obtained. The Authority commented further on this through its Guidelines on Marketing and against Spam of 4 July 2013. Paragraph 2.5 of the Guidelines reads: “Processing for promotional purposes, where performed by way of automated or similar tools, falls within the scope of Section 130(1) and (2) of the Code; accordingly, such tools may only be used for marketing purposes with the contracting party’s or user’s prior consent (opt-in requirement). In terms of making sure that a promotional communication is sent legitimately, it is therefore unlawful to inform recipients that they can object to further communications at the time such a promotional communication is first sent or to request their consent to the processing of their personal data for promotional purposes jointly with such a communication”.

2. The decisions made by the Authority

Turning now again to the case addressed in the order under examination, the Authority found the unlawfulness of both the processing of data collected through the form available at the company’s website and the processing of data (i.e. telephone numbers) autonomously collected by the company on the Web. Said decision was arrived at, respectively, as to the first type of processing, on the ground that the processing was done without first asking and obtaining the specific consent of customers (nominal and legal persons) to the sending of automated promotional communication, as required by Articles 23 and 130, paragraph 1, of the Code, and, as to the second type of processing, on the ground that the processing of personal data of professionals and one-man businesses was done without prior notice and consent (thus breaching Articles 13 and 23 of the Code). The circumstance of the data being autonomously collected on the Web is, moreover, irrelevant. The online availability of phone numbers to the general public does in no way allow their unrestricted and unconditional use for purposes other than those requiring their online publication. On the other hand, as stated by the Authority in the Guidelines on Marketing and against Spam of 4 July 2013, “the sending of promotional communications via the above-mentioned instruments [telephone calls, faxes, emails, mms-messaging, sms-texting and the like] is not allowed without prior consent, even if personal data is taken from public registers, lists, websites, instruments or documents publicly known or knowable”.

This article is for information purposes only and is not intended as a professional opinion. For any further information, please contact your trusted legal advisor or send an email to: corporate.commercial@nctm.it

28/04/2017

According to decision no. 17441, of 31 August 2016, of the First Division of the Supreme Civil Court, the liability of directors without management power cannot originate from a general failure to supervise – that would be identified in the facts as a strict liability – but must be attributed to the breach of the duty to act in an informed way, on the basis of both information to be released by executive directors and information that non-executive directors can gather on their own initiative. Therefore, the determination of the prerequisites for the liability of delegating directors fits in a context accentuating the distinction between the duties imposed on managing directors and those typical of non-executive directors.

1. The case

The case at issue concerns the liability claimed pursuant to Article 164 of Bankruptcy Law by the Receivership of a company limited by shares against its directors for their imprudent management, which resulted in the dispersal of the company’s assets and, consequently, in its bankruptcy. Among others, the most harmful transaction that caused the depletion of the company’s assets, consisted in the purchase of the shares of another company at an exorbitant price compared to the assets of the acquired company; such a transaction was implemented in a clear conflict of interest of the sole director of the purchasing company, who was also majority shareholder, through another company, of the selling company. About one year after the conclusion of the agreement for the purchase of the aforesaid shares, the controlling shareholder of the purchasing company sold part of the shares of such company to other three shareholders, who had also hold, for a limited period of time, the office of directors of the same company; indeed the latters had ceased to hold the office of directors before the approval of the financial statements for the financial year in which they had been appointed as directors. As regards the payment of the purchase price of the abovementioned shares, the purchasing company paid only a small quota thereof as down payment upon completion of the purchase agreement and the remaining part during the office of its new directors.

2. Decision of the Supreme Civil Court, First Division, no. 17441 of 31 August 2016

In the first instance decision the Court of Rome had established the liability of all directors, including those appointed after the completion of the agreement for the purchase of the shares. Indeed, the Court of Appeal of Rome had confirmed the liability of the latters, overturning the judgement only as to the quantum of the damages charged to the directors appointed after the conclusion of the transaction. Instead, the Supreme Court of Appeal reversed and remanded the appeal decision, confirming the principle according to which non-executive directors are liable for the behaviour of directors who performed the action only if they are aware of facts that would demand their intervention, or have failed to diligently take care to act in an informed way. In order to meet the company’s internal organisational requirements and to favour its operational management, administrative and managing functions are often set on two different levels: a first “operating” level is entrusted to managing directors, while a different “evaluation” level is entrusted to delegating directors. Therefore, the formers will take care of the appropriateness of structures and variety of entrepreneurial activities, while delegating directors will mainly have the obligation to evaluate the functioning of managerial structures and to examine their effectiveness. The Court, considering the directors’ liability towards the company as a contractual liability, analysed the issue applying the principle of the so-called “business judgement rule” – that is the absolute immunity of managerial decisions, unless with regard to the ways in which they have been adopted (the so-called “decision making process”) – dwelling, in particular, on the duty to act in an informed way incumbent on non-executive directors and which is functional for the latters to gain knowledge of prejudicial facts committed by executive directors. A further element highlighted by the Supreme Court of Appeal is represented by the causal link that must exist between the inertia of non- executive directors and the detriment caused to the company, taking into account the legal instruments actually available to the latters to react to the “mala gestio” (acts of maladministration) of executive directors. Non-executive directors have the duty to intervene pursuant to Article 2392, second paragraph, of the Italian Civil Code, to prevent the occurrence of harmful events of which they have become aware and such duty results in the control of the activity carried out by managing directors. Therefore, for such purpose, the exchange of information between managing directors and board of directors has a central importance: the so-called information flows are aimed at correcting information asymmetry between directors without management power and managing directors and enable the formers to act in an informed way pursuant to Article 2381, sixth paragraph, of the Italian Civil Code.

3. The duty to act in an informed way

The duty of directors without management power to act in an informed way results in the activation of instruments aimed at gathering additional information to those already received by them through the information flows coming from managing directors. The question springs to mind: when does such prerogative become binding, with the result that the failure to exercise it may become a source of liability? According to the view accepted by the decision at issue, this happens when information coming from managing directors contain gaps, inconsistencies and elements of criticality. Therefore, there is no general supervisory obligation incumbent on non-executive directors that may expose them to strict liability. Hence, according to such view, directors without management power will be exempted from the duty to ask for additional information only should the following conditions apply: (i) the organisational structures evaluated by the board of directors were deemed appropriate; (ii) the information provided by managing directors are complete, plausible and do not arouse, per se, alarm and – in light of the principle of the “business judgement rule” – are not unreasonable from the economic point of view.

4. The structure of non-executive directors’ liability: ultimate interpretation

The joint liability of non-executive directors for harmful transactions carried out by managing directors, provided for by Article 2392, second paragraph, of the Italian Civil Code has, therefore, the characteristics of a subsidiary liability that implies the existence of the following elements: (i) a detriment attributable to the breach of a managing rule ascribable to the managing directors; (ii) the, breach, by non-executive directors, of the duties pertaining to the supervisory function (please note that the burden of proof of such breach lies with the party that takes legal steps bringing the liability action); (iii) the causal link between the breach of the obligations incumbent on non-executive directors and the detriment caused by the harmful transactions carried out by the managing directors. In this particular case, with reference to the required evidence of the causal link, a crucial role – in the sense of excluding the liability of non-executive directors – was played by some factual elements and, in particular, by the fact that the appointment as non-executive directors was subsequent to the completion of the harmful transaction.

The content of this document is for information purposes only and is not, and cannot be interpreted as, a professional opinion on the topics dealt with. For further information please contact your counsel or the following address: corporate.commercial@nctm.it

28/04/2017

By decision no. 25085 of 7 December 2016, the Supreme Court established the legitimacy of a general delegation of management, by the board of directors to individual managing directors with the power to act separately, to the extent that it is not aimed at excluding the exercise of a concurrent managing power by the managing body.

1. Foreword

The delegation of management has become increasingly common in corporate practice in order to assure a more efficient organisation of the company given the scope of the activities and functions of the board of directors. Exactly with a view to rationalise and optimise the company’s organisational models, directors are often forced to make recourse to attorneys entrusted with the completion of a series of tasks in the name and on behalf of the company. The delegation of management may be used provided that the various organisational models are consistent with the imperative rules of corporate legislation reserving the exercise of the administrative function to the persons appointed for such purpose. By decision no. 25085 of 7 December 2016, the Supreme Court ruled, taking on an innovative position that breaks with the past, on the admissibility of a general delegation of management operated by the board of directors of a limited liability company (s.r.l.) in favour of individual directors with managing powers that each of them was entitled to exercise separately.

2. The fact

The event giving rise to the decision at issue concerns a case brought to the Supreme Court by a limited liability company against the decision of the Lombardy Region Tax Commission (“CTR Lombardy”) that rejected the appeal of the company and confirmed the decision whereby the introductory appeal against an assessment of the Italian Revenue Agency was declared inadmissible for being signed by a person deemed not legally entitled to externally represent the company. CTR Lombardy pointed out that the corporate by-laws vested also managing directors, if appointed, with the powers to represent the company within the limits of the powers granted to them and that the board of directors had appointed three directors as managing directors, vesting them, in derogation of the principle of collegiality, with the power to carry out all acts of ordinary and extraordinary administration falling within the duties of the Board, without limitations or exclusions, as well as with the representation of the company for the performance of acts falling within their respective delegations with free and single signature. CTR Lombardy declared the aforesaid delegation invalid by for being issued in breach of the law, hence the company appealed to the Supreme Court

3. Decision no. 25085 of 7 December 2016 of the Supreme Court in the framework of the case law and academic debate on the possible scope and extent of a delegation of management

The Supreme Court established the legitimacy of a general delegation of management to the extent that it is not aimed at excluding the exercise of a concurrent managing power by the managing body. According to the Supreme Court, the general delegation of all powers attributed to the board of directors, except where otherwise required by law, is not prevented by the law or by the principle of collegiality and, on the contrary, is grounded on Articles 2475 and 2381 of the Italian Civil Code, which provide for the possibility to delegate the duties of the Board of Directors and even to concentrate them in only one of its members. Therefore, the by-laws of a limited liability company (s.r.l.), incorporated before 1 January 2004, that provide for the board of directors’ power to delegate its own duties – with the exception of those exclusively reserved by law to the advisory board – to individual managing directors, with the power to act separately, is not in contrast with the mandatory rules and mainly with Article 2475, third paragraph, of the Italian Civil Code (in the text amended by legislative decree no. 6 of 2003), since such rule does not impose – subject to the provisions of the last paragraph – the compulsory application of the principle of collegiality, because of the supplementary nature of the provisions at issue compared to possible different provisions governing such matters contained in the deed of incorporation (paragraphs 1, 3 and 4). Moreover, according to the Court, the by-laws provision authorising the delegation does not constitute an impediment to the concurrent right of the board of directors to exercise the powers to manage the company, in consideration of the powers of information, of direct intervention and evaluation, as well as of evocation and withdrawal – similar to those indicated in Article 2381 of the Italian Civil Code – however owed to the same prior to, concomitantly with and subsequently to the delegated duties. Finally, the right to appear in court cannot depart from granting a delegation of managing powers, but the opposite is not always true since the deed of incorporation or the by-laws may give the capacity to sue and be sued, in the name of the company, to only one of the persons vested with business-related representation powers and entitled to exercise them separately. In particular, the judges of the Supreme Court established that in order for a general delegation of management to be compatible and admissible with respect to the principles of the legal system, it must take into consideration two interpretive criteria: i) the subject-matter of the delegation and ii) behaviours implementing the delegation provisions. With regard to the subject-matter of the power of attorney, the main criticalities occur when the nature of the delegated functions is not merely executive for the company but contemplates a high degree of decisional autonomy. Indeed, such events mainly hide the risk that the delegation results in an unlawful withdrawal of powers of the board of directors. So, in order to avoid objections, it is necessary that the business-related delimitation of the powers granted does not go beyond the decisions concerning business policy and the definition of global targets in individual sectors. Therefore, the power of strategic management must remain with the board because it cannot be subject to delegation without divesting the board of directors of its own duties. With regard to behaviours implementing the delegation provisions, in case of powers of attorney of ambiguous interpretation it is necessary to make recourse to the interpretive criteria under Article 1362 of the Italian Civil Code and, hence, to investigate what was the common intention of the parties in order to establish whether the purpose of the board of directors was the withdrawal of its powers. By way of example, the delegator’s prior approval of the ratification of all acts of the representative may constitute a conduct that raises the presumption of a reduction of the authority of the board of directors.

4. Final considerations

The Supreme Court’s decision at issue is definitely innovative compared to the prior case law and academic position that tended to consider a delegation of management invalid only because of its general nature. Therefore a step forward has been made that should allow to consider admissible also general delegations of management provided that such instruments are not used with the purpose to deprive the administrative body of the functions attributed to the same by the law. Although the decision of the judges of the Supreme Court represents an opening compared to previous positions, it should be kept in mind that the widening of the boundaries of the subject-matter of the delegation of management shall have anyway to respect certain limits such as the retention of the power of strategic management of the company’s business by the directors and the maintenance of a constant flow of information between delegating bodies and delegated bodies pursuant to Article 2381 of the Italian Civil Code.

The content of this document is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For further information please contact your counsel or the following address: corporate.commercial@nctm.it

28/04/2017

Pursuant to Article 2399, letter c), of the Italian Civil Code, statutory auditors whose patrimonial relationships with the company or its subsidiaries may affect their independence cannot be appointed and, if appointed, cease from their office. It has been questioned whether the case whereby a statutory auditor is a member of an association of professionals providing consultancy services to the same company reflects the case provided for by the law. Although the answer to the question was generally affirmative, doubts still remain as to the criteria adopted by the Supreme Court in order to determine the cases in which the independence of a statutory auditor can be actually considered as compromised.

1. The question

By decision no. 9392 of 8 May 2015, the Supreme Court confirmed the judgement of the Court of Appeal that had ruled against the objection to the statement of affairs filed by the former statutory auditor of the bankrupt company, who claimed the exclusion of the credits resulting from the fees due to him for having held said corporate office. In line with the decision of the appeal judge, the Supreme Court held that the credit claimed was inadmissible for the former statutory auditor being in a condition of incompatibility pursuant to Article 2399, letter c), of the Italian Civil Code, since when he was holding the office of statutory auditor, he was at the same time a member of the association of professionals providing consultancy services to the company and hence, in turn, he could expect to receive higher proceeds from the consultancy activity compared to the remuneration received for the performance of the office of statutory auditor. So, confirming the appeal decision, the Supreme Court has also validated the reason supporting the same, whereby the ground for ineligibility under Article 2399, letter c), of the Italian Civil Code would exist every time “proceeds from consultancy activity are higher for the association of professionals and, in turn, for its statutory auditor member, than to those paid to the latter for his/her auditing activity”. Consequently, the Supreme Court concluded that “the independence of the auditor is in danger every time the same may expect from the consultancy relationship a personal gain higher than that obtained from the remuneration as statutory auditor”.

2. Reference legislation

Article 2399, letter c), of the Italian Civil Code, by establishing the ineligibility as statutory auditor of those who are linked to the company “by a working relationship or by an ongoing relationship for the provision of consultancy or of services against payment, or by other financial relationships compromising their independence”, leaves a wide degree of discretion to the judge appointed to establish whether and to which extent the independence of the statutory auditor has been actually affected. Although it is undisputed that grounds for incompatibility exists where the statutory auditor is directly involved in the consultancy activity, the boundaries of the issue further blur in case the company has not a direct consultancy relationship with the statutory auditor but rather with the association of professionals of which he/she is a member. Indeed, in this circumstance it is doubtful whether the particular case outlined in Article 2399, letter c), of the Italian Civil Code could include the case in which the consultancy is provided by an associate or a partner of the statutory auditor. Case law and part of scholars deem that, in such event, the distinction must be determined using a criterion of comparison between proceeds: in brief, the independence of a statutory auditor will be considered as compromised where the profits he/she may obtain from consultancy activity – through the association of professionals to which he/she belongs – are higher than those owed to same for the auditing activity carried out in the company’s structure. Another part of scholars deem instead that the comparison should rather be made between the total income of the association of professionals and proceeds originating from the consultancy activity performed in favour of the company1. One may object, however, that the use of the criterion of comparison between proceeds as sole basis for the evaluation of the existence of grounds for incompatibility and forfeiture – as happened for the decision at issue – allows only a “partial” view of the condition of the statutory auditor, an approach that may lead to an excessively extensive application of the particular case described by the mentioned legislation.

3. The “partial” view adopted by the Supreme Court

The decision at issue is consistent with the opinion of those scholars who consider as relevant only proceeds due, directly or indirectly, to the statutory auditor, consequently excluding any reflections relating to the overall income received from the association of professionals. In particular, the Supreme Court stated that “it is necessary to evaluate financial impairment aspects by checking the quantity of proceeds originating from third parties’ collaboration destined to flow back into the statutory auditor’s personal assets compared to the amount of the fees for the office of statutory auditor.” Several legal authors underlined the limits shown by the adoption of a similar approach, especially when further elements are taken into account in addition to the merely financial one. First of all, it cannot be excluded that a statutory auditor may lack independence also in case the proceeds originating from the consultancy activity provided by the firm to which he/she belongs are minimum or even non-existent. Indeed, a conflicting interest of the statutory auditor may even emerge simply from the reputation of the client and from the consequent benefit that the association of professionals’ image receives from being appointed by the same. In the second place, one cannot but take into consideration the actual position of the professional inside the firm. Indeed, has highlighted by authoritative scholars, while it is correct to deem that, in the case the consultant is in a subordinate position to the statutory auditor, the consultancy activity may be attributed to the latter, it is necessary to carefully evaluate the opportunity to apply the criteria for the comparison between proceeds in the event the subordinate position is held by the statutory auditor. As a matter of fact, in this case it is clear that the statutory auditor’s independence cannot be considered as compromised only due to the fact that the remuneration he/she receives from the association of professionals is higher than the one received for holding the corporate office; this because the statutory auditor/professional, generally, receives from the firm a fixed pay not conditional at all on the return obtained by the firm itself as a result of the consulting activity provided in favour of the company. Finally, it would be advisable to take into account, on the one hand, the size and internal organisation of the association of professionals and, on the other hand, of the activity relating to the consultancy services performed that may be totally separate from the auditing activity carried out by the associate- statutory auditor. Therefore, in light of the foregoing, it is reasonable to believe that, for the purposes of a correct evaluation of the existence of grounds for incompatibility or forfeiture of a statutory auditor pursuant to Article 2399, letter c), of the Italian Civil Code, it would be preferable to carry out an analysis case by case and the analysis of the actual situation of conflict, whereby the criterion of comparison between proceeds should be one of the elements to be taken into consideration rather than the only element on which to base said evaluation.

The content of this document is for information purposes only and is not, and cannot be interpreted as, a professional opinion on the topics dealt with. For further information please contact your counsel or the following address: corporate.commercial@nctm.it

27/04/2017

With a another “late summer intervention”, the legislator intervened once more as a matter of urgency to modify the code of civil procedure, with particular reference to the rules regarding the proceedings before the Supreme court: on August 31, 2016, Decree Law n. 168/2016 was published, entitled “Urgent measures for the resolution of disputes before the Supreme Court and for the efficiency of the judicial offices” (“D.L. 168/2016”).

Decree Law n. 168/2016 was converted into law on October 25, 2016 (“L. 197/2016”) and contains a series of amendments aimed at facilitating a quicker resolution of disputes before the Supreme Court.

In particular, the legislator intervened through:

  • the attribution to the President of the Supreme Court and to the Presidents of the Chambers of the Court of the power to issue a presidential preliminary order to decide questions that, before the amendment, required a decision on behalf of the collegiate body, that is:
  • the order to serve or renew the service of the challenge of a decision in indivisible claim (art. 377, para. 3, code of civil procedure);
  • the declaration of the extinction of the proceedings in case of renouncement and in the other cases provided for by the law, if the date for the decision has not been fixed (art. 391, para. 1, code of civil procedure);
  • the extension of the scope of application of the proceedings in chamber (so called “camera di consgilio”), which becomes the “general” procedural type of proceedings, with consequential reduction of the discussions in a public hearing to mere “residual” hypotheses: if, before the amendment, the proceedings in chamber were held only in the cases expressly provided for by art. 375 of the code of civil procedure, with the entry into force of the new legislation, the Court decides in camera di consiglio (with the obvious exception of the cases in which the President can issue the presidential preliminary order, see above) not only in the cases already expressly provided for by art. 375 code of civil procedure, but also “in every other case, save when the discussion in a public hearing is appropriate, given the particular importance of the legal issue discussed” (art. 375, n. 5, code of civil procedure);
  • the limitation of oral discussion in the proceedings before the Supreme court: if, before the amendment, oral discussion was admitted as a general rule (including in the proceedings in chamber), after the last reform, oral discussion is admitted only if the recourse needs to be decided before a public audience (art. 379 code of civil procedure) (thus, as mentioned, only in residual hypotheses); in every other case in which the recourse is decided in camera di consiglio (which is now the general rule), oral discussion is no longer admitted (arts. 380-bis, 380-bis para. 1, 380-ter code of civil procedure).

If the extension of the scope of application of the proceedings in chamber and, more importantly, the attribution to the President of the Supreme Court and to the Presidents of the Chambers of the Court of the power to decide certain issues with a presidential preliminary order can both be seen as adequate innovations to allow a more rapid resolution of the proceedings before the Supreme Court, the limitation to the admissibility of oral discussion does not seem to have the same impact to that end, and instead affects a right which, to this day, has always been recognized to all parties as a general rule.

In any case, the (eventual) positive effect of the reform on the rapid definition of the proceedings before the Supreme court is encouraged by the application of this new legislation not only (i) to the recourses filed after the entry into force of the reform (i.e. October 31, 2016), but also (ii) to the recourses filed on the date of entry into force for which “the hearing or the convocation in camera has not yet been fixed”.

 

This article is for information purposes only and is not intended as a professional opinion. For further information please contact Roberto Munhoz de Mello (roberto.demello@nctm.it).

Grounds for ineligibility or forfeiture of statutory auditors who are members of an association of professionals
Pursuant to Article 2399, letter c), of the Italian Civil Code, statutory auditors whose patrimonial relationships with the company or its subsidiaries may affect their independence cannot be appointed and, if appointed, cease from their office. It has been questioned whether the case whereby a statutory auditor is a member of an association of professionals providing consultancy services to the same company reflects the case provided for by the law. Although the answer to the question was generally affirmative, doubts still remain as to the criteria adopted by the Supreme Court in order to determine the cases in which the independence of a statutory auditor can be actually considered as compromised.

The scope of the delegation of management in limited liability companies (s.r.l.): content and limits
By decision no. 25085 of 7 December 2016, the Supreme Court established the legitimacy of a general delegation of management, by the board of directors to individual managing directors with the power to act separately, to the extent that it is not aimed at excluding the exercise of a concurrent managing power by the managing body.

Data processing for marketing purposes: the protection of legal entities
By order No. 4 of 12 January 2017, the Italian Data Protection Authority set out the discipline on personal data processing for marketing purposes, finding the unlawfulness of both the processing of data collected through forms available on websites and the processing of data (namely, telephone numbers) autonomously collected on the Web.

Administrative liability of entities under Legislative Decree No. 231/2001 within groups of companies
Liability can be found, under Legislative Decree No. 31 of 2001, on the part of a holding company for offences committed in connection with the activities of its subsidiaries, provided that a) the person acting on behalf of the holding company acts in concert with the person committing the offence on behalf of the controlled entity; and b) the holding company appears to have obtained a concrete advantage from, or pursued an actual interest by way of, the offence committed in the context of the subsidiary’s activity.

The liability of non-executive directors and the duty to act in an informed way
According to decision no. 17441, of 31 August 2016, of the First Division of the Supreme Civil Court, the liability of directors without management power cannot originate from a general failure to supervise – that would be identified in the facts as a strict liability – but must be attributed to the breach of the duty to act in an informed way, on the basis of both information to be released by executive directors and information that non-executive directors can gather on their own initiative. Therefore, the determination of the prerequisites for the liability of delegating directors fits in a context accentuating the distinction between the duties imposed on managing directors and those typical of non-executive directors.

Considerations regarding the possibility to waive the termination effect of a notice to perform
Judgment No. 4205 of 3 March 2016 of the Supreme Court, Second Division, gives us the opportunity to provide a brief overview of the different opinions expressed by courts and legal commentators regarding the possibility to waive the termination effect of a notice to perform.

Validity of the shareolders’ agreements which provide a preventive waiver of the liability action against the directors when taken at the conclusion of the mandate
With the decision of 28th September 2015, No. 19193, the Court of Rome stated the validity of the shareholders’ agreement clauses which provide that the “incoming” shareholders undertake not to bring the liability action against the “outgoing” directors or not to vote for it in the general meeting.

The Supreme Court’s overruling: the banking and finance agreement signed exclusively by the client is null and void
The Supreme Court decides again the issue of the validity of the so called “single signature” agreements, i.e. the copy of banking and finance agreements, kept in the bank’s archives, bearing the client’s signature and not the bank’s one. The Supreme Court holds that these agreements are null and void, thus unenforceable vis à vis the account holder.

Purchase of shares of a general partnership: can the mistake on the value of the share be legitimately qualified as an essential mistake?
The Tribunal of Milan has stated that, as a rule – also with reference to the purchase of shares of a general partnership – the contract can be avoided, upon application of a party, for an essential mistake, only if the contract contains an explicit guarantee on the value of the assets and on the quality of the goods of the company (a guarantee that, according to the Tribunal, the contract at hand lacked).

The new rules regarding the proceedings before the Supreme Court (Decree Law n. 168/2016, converted into Law n. 197/2016)
With another “late summer intervention”, the legislator intervened once more as a matter of urgency to modify the code of civil procedure, with particular reference to the rules regarding the proceedings before the Supreme court: on August 31, 2016, Decree Law n. 168/2016 was published, entitled “Urgent measures for the resolution of disputes before the Supreme Court and for the efficiency of the judicial offices” (“D.L. 168/2016”).

The joined chambers of the court of cassation on the qualification and challenge of the non-final award and of the partial award
“An award that partially decides on the merits of a dispute, immediately challengeable pursuant to art. 827, paragraph 3 of the code of civil procedure, is both that of a generic condemnation pursuant to art. 278 of the code of civil procedure, and the award that decides one or some of the questions of the case, without defining the entire proceedings; instead, the awards that decide preliminary issues are not immediately challengeable.”

Europe Must Go On 

The 60th anniversary of the Treaty of Rome sees the EU much changed from its early origins. We have moved from an economic community to a Union based on civil and human rights and the values common to the peoples of Europe. It has been, and is, a great success.

 

However it is clear that the Union is not without its troubles on this important anniversary. The Brexit negotiations are about to start. There are nationalist and decentralizing tendencies in many Member States and important elections in Germany and France. There are real problems of immigration and the absence of, or the uneven distribution of, economic growth.

 

These problems should not daunt us. Our fathers in the integration process faced greater problems. They sought to make peace and to make an institution to guarantee peace from the ashes of the most destructive of European wars.

 

What we must do is face up to our problems and resolve them. We have great shoulders to stand on. We have been given the evolving EU treaties, the Single Market, a strong Court of Justice in Luxembourg, good competition law, the rights of citizens, in other words a strong legal framework.

 

This is no time for faintheartedness. We must move on with courage and ensure that the Union is with us for more than another 60 years.

In this issue, we analyse a decision of the Italian Consiglio di Stato according to which the publication of applications for renewal of existing maritime port concessions in the EU Official Journal is not required. Any third party wishing to submit competing bids is however guaranteed by the possibility of preventively inquiring about the expiry of a concession as well as by the investigation conducted by the Port Authority (today Port System Authority), which must comply with the principle of selecting the tenderer offering the «best guarantees for a profitable use of the concession».

We then examine the differences in Italian law between a contract of carriage and a procurement contract for the supply of carriage services. It is important to properly classify the type of contract, and here we explain why.

Let us then examine two recent judgments of the Italian Regional Administrative Courts. The first one is on the possible ways of awarding a maritime concession. The second one relates to the applicability of the Italian Public Procurement Code to the management of intermodal freight terminals, the unavoidable consequences of which are summarised here.

In light of the forthcoming entry into force of the IMO Convention for the Control and Management of Ships’ Ballast Water and Sediments, we look at the impact it is expected to have on the shipping sector. One of the major problems is that, to date, there are no clear indications on how to make ships compliant with the new standards. Moreover, there are countries who have more stringent regulations than the IMO Convention. The risk is therefore to invest in equipment that can be deemed unsuitable at a later stage.

A recent ruling of the Italian Supreme Court allows us to briefly discuss the issue of non-payment of insurance premiums and consequent suspension of cover. The Supreme Court confirmed that insurance coverage applies if an insured event occurs within the «grace period», regardless of whether the next premium instalment is paid.

Concerning airports, the Italian Supreme Court opened the door to possibly finding liability on the part of ENAC (the Authority supervising airport activities and air transport in Italy) in case of airplane damage caused by poor maintenance of taxiways.

Finally, we conclude with our usual review of the news from the world of maritime and port labour. The most important news is about the renewal, in Italy, of the National Collective Bargaining Agreement for shipping agencies’ executives, which brought some improvement to the current situation.

We want to thank our colleagues at Nctm Brussels’s office for their contributions highlighting the most significant actions taken by EU institutions in the international shipping and trade sector.

You will also find a list of our events taking place at our Milan and Rome offices, in addition to the usual update on our firm’s activities over the past two months.

According to the Court of Cassation a concordato plan not describing in detail how it can be implemented is not feasible
The Court of Cassation (decision No. 4915 of 27 February 2017) lowered the threshold allowing the Bankruptcy Court to review the feasibility of the concordato preventivo proposal.

Does a concordato proposal need to assign all future earnings to the creditors ?
The Court of Florence (November 2, 2016) confirmed that the debtor can retain part of his assets, with a view to support the company’s recovery and in derogation to principles of liability of the debtor

Cram down pursuant to Art. 182-septies of the Italian Bankruptcy Law, if the agreement is more convenient for the bank than bankruptcy liquidation
A ruling of the Court of Padua of 31 December 2016 is compared with few other known Court decisions regarding the extension of the effects of a debt restructuring agreement to dissenting financial creditors

 

 

Log in with your credentials

Forgot your details?