New limits on the liability of statutory auditors with the amendment of Article 2407 of the Italian Civil Code.

On 9 April 2024, the Justice Commission of the “Camera dei Deputati” approved the law proposal A.C. 1276 to amend Article 2407 of the Italian Civil Code on the liability of statutory auditors.

 The proposal envisages very potential important amendments to the codified rule in accordance with the principle of proportionality, introducing a limit to the liability of statutory auditors who, called upon to answer jointly and severally with the directors, are often sentenced to pay sums disproportionate to the office they have undertaken and performed.

 Paragraph 1 of Art. 2407 of the Civil Code remains unchanged, according to which 'statutory auditors shall perform their duties with the professionalism and diligence required by the nature of their office; they shall be responsible for the truthfulness of their attestations and shall keep secret the facts and documents of which they have knowledge by reason of their office'. It therefore remains the responsibility of the statutory auditors to act with professionalism and diligence, as well as the obligation to maintain the confidentiality of information obtained in the performance of their duties.

 The proposed law at stake, by intervening on paragraph 2 of Article 2407 of the Italian Civil Code, introduces a limitation on the liability of the statutory auditors – if they have acted without malice and also in the event that the Board of Auditors is appointed as the legal auditor of the company pursuant to Article 2409 bis, paragraph 2, of the Italian Civil Code - by anchoring the damages claimed to a multiple of the annual remuneration received by the statutory auditors for carrying out their role, as follow:

 -          with remuneration up to EUR 10,000 per year = 15 times the remuneration;

-          with remuneration from 10,000 to 50,000 euro per year = 12 times the remuneration;

-          with remuneration exceeding 50,000 euro per year = 10 times the remuneration.

 In fact, the proposed legislation establishes that "Except for cases in which they have acted with malice, even in cases in which the legal audit is performed by a board of auditors pursuant to Article 2409-bis, second paragraph, statutory auditors who violate their duties are liable for damages caused to the company that conferred the office, its shareholders, creditors and third parties to the extent of a multiple of the annual remuneration received, according to the following brackets: for remuneration up to 10.000 euro, fifteen times the fee; for fees from 10,000 to 50,000 euro, twelve times the fee; for fees greater than 50,000 euro, ten times the fee."

 On the other hand, the regulatory provision of paragraph 3 remains unchanged, according to which 'the provisions of Articles 2393, 2393-bis, 2394-bis and 2395 shall apply, mutatis mutandis, to liability actions against statutory auditors'.

 The proposal also regulates the statute of limitations for bringing liability actions against statutory auditors, specifying in the last paragraph of Article 2407 of the Civil Code that 'liability actions against statutory auditors are time-barred within five years from the filing of the report referred to in Article 2429 relating to the financial year in which the damage occurred'.

 All in all, the draft law at stake would bring significant favorable chances for professionals who perform the role of statutory auditors (in order to limit their liability in proportion to the activity they perform and the responsibilities attributable to them as members of the Board of Auditors) and, consequently, would limit the insurers’ exposure.

 The aaove proposal of law is now before Parliament from which final approval of the proposal is expected.