Internal audit and constitutional amendments with new Code of the Economic Crisis and Insolvency

The new Code of the Economic Crisis and Insolvency, sets up some amendments on article no. 2477 of Civil Code, modifying the part relating to the limits for adopting internal control or auditors and for the termination of their functions with respect to limited liability corporations (the Italian “SRL”) and cooperative entities.

The new article provides for the commitment to adopt internal control or auditors for the SRL and cooperative entities that exceed for two consecutive years at least one of the following limits:

  • 2 Million euro of assets;
  • 2 Million euro in revenues;
  • 10 employees employed during the financial year.

The duty to appoint auditors ceases when, for three consecutive years none of the aforesaid limits have been exceeded. There is an automatic forfeiture of the board of auditors if the deed of incorporation does not expressly provide for their appointment, otherwise the mandate will last until its expiration.

On the other hand, the other two requirements already established in art. 2477 of the Civil Code (i.e. the obligation to draw up the consolidated financial statements and the control by a company obliged to audit the accounts) remain unchanged.

The new Law provides that limited liability companies and cooperative entities already established on the date of entry into force of the new standard, if deemed necessary, must conform the deed of incorporation and the bylaws, within nine months of the aforesaid date.

In the first application of the new provisions referred to in article 2477, for the purposes of verifying the moment in which the new appointment obligations occur, the two periods prior to the entry into force of the standard must be considered.

For the board of auditors already in place, in the silence of the law, it will be necessary to distinguish according to whether the deed of incorporation permits the appointment of the aforesaid board or does not foresee anything in this sense.

In the first case the appointed body does not automatically lapse but can remain on duty until the natural expiry. In the absence of any provision, on the other hand, the majority doctrine believes that the appointed body should cease, since the requirement that it has been appointed has failed by law.

The new wording of paragraph 6 of article 2477 c.c. provides that, in the event of inactivity of the shareholders meeting, the Court will have to appoint the board of auditors, at the request of any stakeholder or based on the request of the Businesses Registrar.

Andersen Tax & Legal professionals are available to provide further information and clarifications on the above.