The Legislative Decree n. 231/2001, sanctioning directly the real beneficiary of the crime (the entity), was created to prevent and combat the so-called “Corporate crime“. More precisely, in addition to the liability of the agent (senior manager and employees), is introduced a liability of the company in criminal proceedings which will have direct effects on its assets.
In order to prevent the creation of offenses which could give rise to liability of the entity (hereinafter also the “Crime Offenses”), the decree gives the latter the right to adopt an organization, management and control model ( hereinafter also the “Model”) by which are taken the necessary measures to prevent the realization of the aforementioned crimes.
If a manager or an employee commits one of the offences provided for by Legislative Decree 231/2001, in the interest or for the benefit of the company, the company could be subject to the sanctions provided for in the Decree, i.e.
- Financial penalties: always applied when it is established that an administrative offence has been committed as a result of a crime.
- Disqualification sanctions: these are particularly serious because, in some cases, they even produce the paralysis of the activities or its drastic compression, with heavy repercussions on the existence of the society.
- Confiscation: it is always applied, even in an equivalent form, when the crimes are committed by managers and, in general, with the sentence of conviction.
- Publication of the sentence: this sanction tends to damage the company’s image and reputation in the market and is applied only in particularly serious cases (when imposed a disqualification sanction).The aforementioned consequences do not occur if the company has implemented and observed the Model. The exempting effectiveness of the Model – which is the most advantageous aspect envisaged by the decree – is provided in art. 6 which exempts the entity from criminal liability, if the offense is committed by manager, only if the company proves that it has taken the necessary measures to prevent the commission of the offenses provided for by the decree.
In other words, the offense must be the result of the personal initiative of an unfaithful manager who fraudulently escaped from the supervision exercised.In addition, the Model is also effective in the event that the offense was committed by subjects under the direction of others. Infact, the article 7 of the Decree excludes the liability of the society if, before the commission of the crime, the society adopted and effectively implemented a Model suitable to prevent the crime provided for by the Decree.
Directors’ liability for Corporate
Failure to implement the Model could also lead the conviction of the directors to pay damages as a result of a liability action brought by the company. Indeed, under the provisions of Article 2392 of the Italian Civil Code, Directors are liable for damages and penalties that the company is obliged to pay when they fail to fulfil their duties under the law, with the diligence required by the nature of their duties and their specific competencies. Therefore, in the event of ineffective implementation of the organisational Model, manager could be liable pursuant to Articles 2392 et seq. of the Italian Civil Code, because, in such a case, there would be a corporate “mala gestio“.
In order to ensure the correct implementation of the Model and, with respect to crimes attributable to Manager, the creation of a Supervisory Body (hereinafter also “ODV“) is required. The ODV is the body created to supervise the correct observance of the Model and, for this purpose, must have the following requirements:
- continuity of action;
To ensure compliance with these requirements, a mixed composition (internal and external members) is usually suggested, as in our case.
It is appropriate to specify that the ODV has exclusively surveillance and control powers and, therefore, any management activity (both active and impedimental) is precluded. In fact, the recipient of the activity of the ODV is the managment of the company which, however, is responsible for the final decision on the reports that are sent to it.
Our company has adopted the Model and, to this end, the ODV has been appointed, with external and internal members.
Therefore, correct observance of the Model is guaranteed by its work.
For example but not limited to, the ODV must:
- periodically check the Organizational Model, analyzing and checking the specific areas of business activity deemed at risk. During the year, in addition, in order to confirm the validity of the Model, it will update the list of corporate areas at risk of crime;
- periodically supervise the adequacy of the power of attorney system, for this purpose it can carry out cross-checks to verify the correspondence between the powers formally conferred and the functions effectively performed;
- meet annually to prepare an activity plan to follow. He draws up minutes of these meetings which he forwards to the Board of Directors;
- meet periodically (at least once a month and, in any case, whenever the need arises). He draws up minutes of these meetings which he forwards to the Board of Directors;
- collect the inherent reports.
In the light of the above analysis, it is important to have the Model set forth in Legislative Decree no. 231/2001.
This conclusion is reached after having ascertained the benefits that derive from its implementation, namely:
- Exemption of the company from criminal liability;
- Exemption of directors from liability;
- Exemption from liability for crimes committed by managers or employees of subsidiaries.
Given these advantages, the implementation of the Model should be considered necessary. The higher cost will be incurred at the outset, while in subsequent periods the cost for maintenance will be modest. The organizational Model, in fact, once implemented,
will have to be updated because the continuous change of the organization, the presence of gaps in the Model or the detection of significant violations of the same, require its adaptation in order to continue to preserve its preventive suitability. This need for updating must be seen as an investment aimed at keeping the company’s organisation focused on the prevention of crimes whose implementation could cause significant economic damage, given the heavy penalties provided for by the decree.
- Legislative Decree no. 231/2001 implements Articles 11 and 14 of Delegated Law no. 300 of 29 September 2000.
- SOTIS, Community law and criminal court, in Corr. mer. 2008, page 1 and following.
- FIORELLA, the general principles of corporate criminal law, 2008, page 132 and following.
- CONTI, The criminal law of the company, 2005, page 53 and following.
- Article 7 of Legislative Decree no. 231/2001 entitled “Subjects to others’ management and model organization” reads as follows: 1. In the case provided for in Article 5(1)(b), the entity shall is responsible if the commission of the crime was made possible failure to comply with management or supervisory obligations. 2. In any event, non compliance with the obligations of management or supervision if the company, before the crime was committed, has adopted and effectively implemented an organisational model, management and control suitable to prevent crimes of the type of that occurred. 3. The model provides, in relation to the nature and size of the organization as well as the type of activity carried out. suitable to ensure that the activity is carried out in compliance with the law and to discover and eliminate situations of risk. 4. The effective implementation of the model requires: (a) a periodic review and possible amendment of the model when significant prescription violations are discovered or when there are changes in the organisation, or in the business; (b) a disciplinary system suitable for penalising failure to comply with compliance with the measures indicated in the model.
- AMATO “New regulations on “delegation of functions“, in Penal Court 2009, 5, 2096 (Note to Penal Court, Section IV, 27 November 2008, no. 48295).
- MUSCO, Company Criminal Law, 2010, Turin, page 173 and following.
- The exclusion from liability deriving by the Model is established by article 6 of Legislative Decree no. 231/2001 which reads as follows: If the offence has been committed by the persons indicated in article 5, paragraph 1, letter a), the entity is not liable if it proves that it did so: a) the management body has adopted and effectively implemented, prior to the commission of the offence, organisational and management models suitable for preventing offences of the type that has occurred; b) the task of supervising the functioning of and compliance with the models and ensuring that they are updated has been entrusted to a body of the entity with autonomous powers of initiative and control; c) the persons have committed the offence by fraudulently circumventing the organisation and management models; d) there was no omitted or insufficient supervision by the body referred to in letter b).
- Article 2392 of the Italian Civil Code.