Exercise your responsibilities carefully as the penalties for failure to do so can be severe.
You are jointly and severally liable towards the below listed individuals for damages suffered by them as a result of negligence:
Where some of the duties of the directors have been delegated to individual directors (eg Managing Director) or to an executive committee, the responsibility for carrying out such duties rests on the delegated individual / committee.
However, even where duties have been delegated to individual directors or to an executive committee, you are all jointly liable if you fail to supervise the general conduct of company affairs. Particularly, where you are aware of acts which could prejudice the Company and you did not do what you could to prevent the performance of the act or to eliminate or reduce the harmful consequences.
Criminal liability is always individual pursuant to the Italian Criminal law. Criminal liability is assessed on a case by case basis by the Public Prosecutor who will rely on the Company’s excerpts, the organisational chart, the Board of Directors meeting minutes, the legal documents, the witnesses and the relevant conduct.
Examples of penalties include:
In addition to the individual liability, corporate liability may exist should any of a large number of offences, whether committed in Italy or overseas, be committed by individuals holding representative, administrative or managerial positions within the company, or their officers, and the criminal acts are in the interest of or otherwise benefit the company.
As a general rule under Italian law, breach of tax regulations gives rise to two categories of sanction:
Either the breach of duty itself, or the imposition of one of the sanctions described above, may lead to disciplinary action being taken against you and/ or limitations upon you being able to continue in your role.
Each director may be liable for fines if the annual accounts of the company are not approved and filed with the timeframe required by the Articles or legislation.
Business decisions which may affect the company’s business and/or its results (hence, indirectly, its creditors) need to be evaluated on a case by case basis. The basic principle is that business decisions, unless absolutely unreasonable, fraudulent or made in a conflict of interest situation, should not result in directors’ liability (thus limiting their liability exposure in case of bad luck or errors made in good faith).
As a general rule, liability of the Company can be excluded, or limited, if the Board of Directors:
If you are a Managing Director you have to act in accordance with the powers delegated by the Board of Directors of the Company.
The Board of Directors cannot delegate the following powers, which shall be exercised by the Board of Directors as a whole:
Insurance policies are intended to protect directors and officers against allegations of wrongful conduct when acting on behalf of the company.
In order to mitigate their exposure, the directors should take due note of the fact that D&O insurance policies may cover against a large amount of liabilities, exclusion made for liabilities (and relevant losses) arising out of directors’ fraudulent actions and omissions and, unless otherwise stated in the insurance policy, their gross negligence.