Italy Update: De facto administrator and offences

The administrator by right of S.r.l. Alfa, acting as a mere figurehead, had made a proposal for review, then accepted, against the precautionary measure of house arrest, to which he had been subjected as a suspect of various tax crimes, including: criminal association, money laundering and embezzlement. Subsequently, the Public Prosecutor’s Office had appealed to the Court of Cassation against the order of the Court of Review, alleging the legal defect of the contested measure in relation to the criminal liability of the administrator by right, for having failed to comply with his duty of vigilance and diligence.

As a preliminary point, the Supreme Court pointed out that the fact that the suspect has assumed, as a mere figurehead, the office of director by right of the companies used for the purpose of money laundering and re-use of money, is not enough, in itself, to integrate the seriousness of the alleged crimes. And this is because there was no evidence of the sharing, by the suspect, neither of the elusive purposes nor of the awareness, at the time of acceptance of the fictitious office, of the instrumentalization of the companies to the realization of money laundering activities by the de facto directors.

In the second place, the courts of legality found that, while, on the one hand, the administrator by right had to provide for the regular keeping of accounting records and the regular destination of company assets, he was not required, on the contrary, to monitor the regular observance of any criminal law by the subjects involved in social activities. Consequently, the responsibility of the administrator by right for the conduct carried out by the de facto managers can be affirmed only where the general criteria on intent in the participation of persons pursuant to art. 110 c.p.

In light of the above, the Court of Cassation rejected the appeal of the Public Prosecutor’s Office against the order of the Court of Review which had revoked the precautionary measure of house arrest.

By Quorum, Italy, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact italy@transatlanticlaw.com

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