Foreign companies are subject to the Italian Legislative Decree 231 on Administrative Liability of the Company Deriving from Offences. Francesco Rubino of Morri Rossetti e Associati in Milan answers our questions and presents a general view.
Could you outline the Italian Legislative Decree 231/2001 for us?
Legislative Decree no. 231 of 8 June 2001 (the “Decree”) provides for a direct liability of legal entities, companies and associations for certain crimes committed by their representatives.
With the Decree, the administrative liability of entities is now distinct from (and independent of) the responsibility of the individual person who commits the offense and it exists even if the perpetrator of the offense has not been identified, or if the offense has been extinguished other than by amnesty. The liability of the entity is always additional to and may never replace the liability of the individual person who perpetrated the offense.
What was the reason for addressing this issue?
Nowadays the Decree is taking on an increasingly international feature. Although the Decree does not directly provide an Organizational Model for groups of companies, the most recent judgements have considered liable foreign companies for a crime committed in Italy when:
the company carries on its business in Italy without a subsidiary company;
the crime was committed by executives and subordinates of the (Italian) subsidiary/affiliate in the direct and specific interest of the holding company (or of any other specific company belonging to the same Group) or when the executives and subordinates of the subsidiary/affiliate committing the predicate crimes were at the same time representatives of the holding/parent or of another company of the Group.
Could you describe the type and scope of corporate crime committed in this field?
Crimes generating the company’s liability were initially limited to certain crimes, such as corruption and misappropriation of public funds. Since 2001, the list of the crimes has been extended, and now include:
crimes against the Public Administration
IT crimes
crimes involving currency fraud
corporate crimes
crimes committed for the purposes of terrorism or undermining law and order
offences involving the abuse of confidential information and market manipulation
culpable homicide and serious or life-threatening injury resulting from any violation of workplace health and safety regulations
receiving of stolen goods, money laundering and the deployment of illegally obtained money, goods or other criminal proceeds
cross-border crimes
environmental crimes
recruitment of subjects without a residence permit
International crimes
How can the Italian Legislative Decree 231 be interpreted and applied?
The company’s liability is triggered if such crimes have been committed by subject holding representative, administrative or (de facto) managerial positions in the company, or by persons working under their control, provided that these persons have committed the crimes at least “also” (i) in the interest of or (ii) for the benefit of the company and the company cannot demonstrate to have taken adequate measures to prevent the committal of such crimes.
When does administrative liability apply and when is the liability of a company excluded?
The law aims to encourage companies to adopt corporate governance structures and risk prevention systems to stop managers, executives, employees and external collaborators from committing crimes. The failure to adopt such structure in a timely fashion has resulted in many Italian and foreign companies being held liable under the Decree.
What consequences result for companies from the Italian Legislative Decree 231?
Where crimes have been committed and the company cannot prove to have done what is necessary to prevent (those type of) crimes, the company may be subject to the following sanctions:
Pecuniary fines
Debarments
Seizing and confiscation
Publication of the conviction judgement
Links:
Morri Rossetti e Associati website: www.mralex.it
Twitter: twitter.com/morri_rossetti
LinkedIn: www.linkedin.com/company/morri-rossetti
