De facto administrators and criminal liability

The Court of Cassation, Criminal Sessions, recently outlined the main features of de facto administrators.

In particular, by virtue of Judgment 12912 of 24 April 2020,(1) the Court of Cassation held that:

the notion of de facto administrator, as provided by art. 2639 of the Italian Civil Code, is based on the continuous and significant exercise of typical powers inherent to the qualification or function of administrator by someone whom has not been formally appointed as administrator.

However, the administrator's activity:

does not necessarily entail the exercise of all the powers of the management body, but require[s] the carrying out of an appreciable management activity, performed in a non-episodic or occasional way… at any stage of the organisational, production or commercial sequence of the company's activity.

In this case, the Court of Cassation confirmed the Court of Appeal's decision, holding that a de facto administrator is a person who, on behalf of a company or business entity:

• carries out relevant and continuous management activities;
• disburses significant loans to the company;
• uses their professional office as the company's headquarters;
• keeps and manages the company's accounts;
• enters into contracts with third parties as a representative of the company or entity; and
• participates in meetings of corporate bodies, particularly shareholders' meetings.

Finally, the court highlighted that a de facto director is burdened with the entire range of duties to which a de jure administrator is subject.

As a result, should the necessary objective and subjective requirements apply, a de facto administrator is criminally responsible for their conduct which breaches criminal standards as if they were a de jure administrator, even in the event of guilty and conscious inertia.

For further information on this topic please contact Antonio Grieco at Grieco e Associati by telephone (+39 06 420 3881) or email (a.grieco@griecoassociati.com). The Grieco e Associati website can be accessed at www.griecoassociati.com.

Endnotes

(1) Cass Pen, Section V, 24 April 2020, Number 12912.