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Written By: Carla Coronelli, Esq., Francesco Bico, Esq., and  Maria Adele De Luca, Esq.

Studio Legale F. De Luca

Milan, Italy

Foreign investors in Italy to keep an eye on Italian administrative liability for companies and other entities covering a full range of crimes, including environmental crimes starting from Summer 2011.

The scope

In compliance with EU Directives, Italian Legislative Decree No.231/2001 had provided for a direct liability of companies and other entities for certain crimes committed by their representatives (or by employees subject to the latters’ control) in the interest of for the benefit of the company.

In particular, companies may be subject to fines up to 1,5 million Euro and restraining orders such as: prohibition against carrying on the activity, suspension or revocation of the authorizations, concessions, licenses, prohibition against contracting with the public administration, exclusion from public financing and grant-in aids and possible revocation of those already granted; in addiction Italian law also provides for the confiscation of the economic benefit deriving from the crime.

List of crimes

The list of crimes covered by said rule have been gradually extended from time to time by Italian legislator within the framework of the EU directive, which indeed left to each EU country the possibility to fill in the behaviors to be considered relevant for that purpose. Among the others, following crimes are covered: corruption, bribery, misappropriation of public funds, market abuse, crimes against industry and commerce, such as disruption of the freedom of trade and commerce fraud, corporate crimes, such as false statements to the public, to the third creditors and shareholders, failure to allow adequate corporate control; illegal profits and reserve distribution;  money laundering, homicide and injuries caused by violation of workplace safety regulations, IT and IP crimes and many others.

Recently the list has been varied by including a wide range of environmental crimes, such as the discharge, emission or introduction of a quantity of materials or ionising radiation into air, soil or water, and the collection, transport, recovery or disposal of waste, which cause or are likely to cause death or serious injury to any person or substantial damage to the quality of air, the quality of soil or the quality of water, or to animals or plants.

Exemption from liability

Decree 231 provides exemptions from liability if the company has adopted a corporate governance structure suitable for preventing the specific crime concerned. To obtain such protections, the company must implement a management and control system (so called "Modello Organizzativo"), whose compliance and efficiency are supervised and monitored by an independent and self-governing body (so called "Organismo di Vigilanza - OdV").

The adoption of such a corporate governance structure is not mandatory but should be internally evaluated based on a risk assessment of the activity carried out having regard to the 231 relevant categories of crimes.

Italian companies and Italian subsidiaries of foreign groups should therefore pay particular attention to the framework of the criminal liability of the legal entities, which are increasingly important in the business contest both from an economic point of view and for the image of a corporation.

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