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CONTROL BODY OF SPA IN ITALY

Investing in Italy


Control Body of the S.p.A. in Italy


The control body (called Collegio dei Revisori) has the task of controlling company management and/or auditing its accounts, even if auditing may also be performed by an independent auditing firm.


Under the corporate law reform, there are 3 types of corporate governance that may be chosen when establishing an S.p.A.:



1) Ordinary Model, this is the most widespread model of corporate governance in Italy, it states for separation between management and control functions, in fact, under this model:

  • company management is entrusted to an administrative body which could be composed by the Board of Directors with multiple directors or by a sole director; in case of Board of Directors the board may delegate some of its administrative powers to a chief executive officer (Managing Director) or to an executive committee.

The Directors (those of the Board of Directors and also a sole director) are appointed by shareholders for maximum 3 financial years term; this term will expire on the date of the Shareholders’ Meeting convened for approval of the financial statements of the final financial year.


The Directors may be re-elected, unless otherwise specified in the Articles of Association.


The Directors may be removed from their duty at any time, but in case of termination without just cause the removed directors may claim for damages.

 
When shareholders appoint the members of the Board of Directors, they also appoint the Chairman of the Board.

Decisions approved by the Board of Directors are taken on a collegial basis.

Decisions taken by the Board of Directors are valid if are met following conditions:

  • presence of a majority of directors of the BoD, unless the cases stated by the Articles of Association requiring a larger quorum; and
  • favorable vote in respect of absolute majority of the members present for voting, unless otherwise specified in the Articles of Association.

In case of deadlock the Italian law states that the vote of the chairman of the Board of Directors counts twice (“casting vote”).


Decisions taken by the Board of Directors are recorded in the specific meeting minutes included in a proper file. Alike decisions issued by a sole director will be recorded in an ad-hoc file.


Management control (Collegio Sindacale) is performed by a board of auditors of 3 or 5 standing auditors (sindaci effettivi) and 2 alternate auditors (sindaci supplenti), at least 1 standing auditor and 1 alternate auditor must be enrolled in the Register of Auditors (Registro dei Revisori), while the other members of the Board must be registered in the rolls of lawyers or accountants or labour consultants or be full university professors in law on economics (as per Decreto 29 Dicembre 2004 n. 320).


The so called “Legge di Stabilità” of December 2011 has stated the possibility for SRL company of any dimension and for S.p.A. with a net turnover of less than € 1 million to entrust one sole auditor.


Auditors and chairman of the Board of Auditors shall be both appointed by the Shareholders Meeting, they serve terms covering 3 financial years.


Auditors may be removed from their task only in case of just cause, after removal resolution taken by a court.

About the meetings: the Board of Auditors shall meet at least every 90 days; the appointment of any standing auditor (sindaco effettivo) who will be not present for 2 meetings of the Board during one financial year without giving proper justification, shall lapse.


Accounts are audited by an external auditor or auditing firm enrolled in the Register of Auditors.

When a S.p.A. is not publicly listed at the stock exchange or is not required to issue consolidated financial statements, and whereby expressly allowed by its Articles of Association, the accounts may be audited by the Board of Auditors, in these cases all members of the Board of Auditors (both standing and alternates) shall be enrolled in the Register of Auditors.


The Shareholders’ Meeting hires the external auditor(s) or auditing firm to audit the accounts of an S.p.A.; the appointment concerns 3 financial years. The external auditors may be revoked only for just cause after obtaining the opinion of the Board of Auditors, further,  the revocation shall be approved by a court.



2) One-tier model, it is an alternative to the ordinary model which adoption must be specifically stated in the Articles of Association, it has a simplified and more flexible structure and exchange of information between management body and control body.

 
The characteristics of this model are as follows:

  • company management is entrusted to a Board of Directors
  • management control is entrusted to a Management Control Committee appointed within the Board of Directors
  • accounts are audited by an external auditor or auditing firm enrolled in the Register of Auditors.

The Shareholders’ Meeting appoints the members of the Board of Directors’ and the external auditors or auditing firm engaged to audit the accounts.



3) Two-tier model, it is an alternative to the ordinary model and to the one-tier model. The choice of this model is allowed only when it is specifically indicated in the company’s Articles of Association.


The characteristics of this model are as follows:

  • company management is entrusted to a Management Board, which may delegate some of its administrative powers to one or more of its members these latter may not be appointed to the Supervisory Board
  • management control is entrusted to a Supervisory Board
  • accounts are audited by an external auditor or by an auditing firm enrolled in the Register of Auditors.

The Supervisory Board members and the external auditors or auditing firm engaged to audit accounts, are appointed by the Shareholders’ Meeting.


Shareholders can approve decisions only about major matters for the company, this model is suited for larger organization. 


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