Italian law does not grant legal persons with the right to be appointed as company directors. Therefore, most practitioners and commentators have considered this lack of regulation as an implicit prohibition of the appointment as directors of all persons other than individuals.
However, over the past years a different interpretation of the provisions set forth in the Italian Civil Code has brought part of the experts to consider the appointment of legal persons as directors both lawful and appropriate.
The corporate law reform introduced in 2003 had the opportunity to solve the dispute, but unfortunately the Decree no. 6 did not answer to the question.
Certainly, this has been a missed opportunity for clarification.
What is the opinion of Notary Publics?
Until few months ago, the mentioned debate was at the theoretical level only. Neither legal entities were company directors nor equity holders planned to appoint them. In fact, no notary would allow such appointment by executing the deed of incorporation and the By-laws.
Therefore, the decisive change came by the supervisory body of the Italian notaries public: both the Consiglio Nazionale del Notariato (i.e. the supervisory entity) and the Commission for the Study of Corporate Law of Consiglio Notarile of Milan have admitted the possibility to appoint legal persons as company directors.
In particular, the Commission for the Study of Corporate Law codified in its Statement no. 100 the principle previously issued by the Consiglio Nazionale del Notariato. This statement provides that "A section in the By-laws of either a corporation ["S.p.A."] or a limited liability company ["S.r.l."] that provides for the right to appoint a legal entity as director of the company is valid and binding".
These new opinions are based on interpretation of sections of the Italian Civil Code as amended by the corporate law reform.
Certainly the strongest argumentations are the following:
- Currently pursuant to the corporate law reform,
corporations can hold equity interests in companies which
determine unlimited liability;
- These interests are those held in a company other than
- Therefore, since the legislator provides a corporation
with the right to act as director of a company, there is not
any appreciable reason to exclude the same right with regard
to a corporation.
The above mentioned opinions by Consiglio Nazionale del Notariato and by the Commission for the Study of Corporate Law are not binding but, in any case, have strong persuasive authority and will certainly carry significant weight with lawyers and, more importantly, with the Courts.
Opportunities Offered by the New Interpretation
The decision of the Consiglio Nazionale del Notariato opens up new scenarios and demonstrates that Italian corporate law has begun to offer very flexible tools as so other legal systems traditionally considered more elastic and progressive.
Currently, it should be now possible to incorporate companies having as sole purpose to act as directors of other companies.
In addition, multinational companies, depending on the circumstances, may decide to incorporate a vehicle to act as director in all the jurisdictions where a legal person can be appointed as director. If appropriately structured, this could lead to a more streamlined management of the subsidiaries.
Certainly, the solution given by the mentioned influential Bodies may allow lawyers to suggest to their clients to appoint legal persons as company directors in light of the above considerations.
However, when doing so, lawyers should also take into account that many holes presently remain in the regulation of the legal person as director. In this context, as a consequence, lawyers should take particular care to ensure that the By-laws fill in appropriately all holes left in the original text of the By-laws.
Furthermore, it is equally desirable that the legislator provides for an accomplished regulation on this matter so that Italian corporate law is entirely into line with legal systems (eg, the Netherlands, France and England) which expressly allow a legal person to be appointed as a director.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.