21 марта, 2024

Legal scenarios related to the omitted appointment of the Controlling Body or the Auditor

An increasing number of Italian companies are receiving reminder letters over the past few weeks from the Italian Companies Register for not appointing the company’s controlling body or auditor, appointment due for overcoming the relevant legal requirements.

In this regard, it is appropriate to recall that article 2477 of the Italian Civil Code establishes the mandatory appointment of an auditor or a controlling body for companies that:
a) are required to draft a consolidated balance sheet;
b) control a company which has appointed a company’s auditor;
c) have not overcome for two financial years in a row one of the following limits at least:
1. assets: (equal to) 4 million euros;
2. revenue from sales and services: 4 million euros;
3. average of employees employed during the financial year: 20 units.

In particular, paragraph 5 of the same article states that “the shareholders’ meeting approving the balance sheet in which the limits indicated in the second paragraph are exceeded must appoint the controlling body or the auditor within thirty days. If the shareholders’ meeting fails to do so, the appointment shall be made by the court at the request of any interested party or upon indication by the Companies Register”.
In light of this, the Companies Register, by means of the transmission of letters of reminder, call on the companies that have overcome the limits listed in article 2477, third paragraph, of the Italian Civil Code, with the approval of the financial statements as at 31st December 2022, to appoint the Controlling Body within 60 days from the reception of the notice, stressing that, in absence, the company will be reported to the Court for appointment ex officio.

The concerns raised in recent weeks are mainly about the list from which the sole auditor will be appointed as well as the criteria for determining remuneration.
In relation to this, the most recent interpretations of the letter received by the companies, consistent with the parameters mentioned above, seem to reinforce the assumption that the designated Controlling Body will also be entrusted with activities related to the legal audit of the accounts. This decision seems to be driven by the consideration of its cost-effectiveness and ease of implementation.
Lastly, it should be recalled that the Controlling Body is only required to supervise the adequacy and reliability of the administrative and accounting system, unless the By-laws explicitly provide that he shall also perform the legal audit of the company’s accounts.