Italian Legislative Decree No. 231
Italian Legislative Decree No. 231 of June 8th, 2001, introduced for the first time in the Italian legal system the “administrative” liability of the corporations, associations, and other entities, including those are not legal entities. This kind of liability is in addition to the criminal liability of the person who materially carried out the illegal act.
The “administrative” liability of entities represents a “tertium genus” of liability with respect to civil liability, which is essentially compensatory and/or restitutory, and with respect to criminal liability, which can only affect the natural person who committed the crime (according to the principle “societas delinquere non potest“).
When does the liability of the entity arise?
The liability arises upon the occurrence of 3 prerequisites:
- The commission of one of the crimes provided for in Articles 24 et seq. of Legislative Decree No. 231/2001, which constitute the so-called “catalog of premises-crimes,”.
Among them:
- crimes against the Public Administration: undue receipt of subsidy, fraud to the detriment of the State or a public body to obtain public subsidy and computer fraud to the detriment of the State or a public body, bribery, corruption;
- crimes against public faith: counterfeiting of coins, credit cards and stamps;
- corporate crimes: false in corporate communications and false statements;
- crimes against the State: crimes with the aim of terrorism or subversion of the democratic order;
- crimes against individuals;
- financial crimes: insider trading and market manipulation;
- crimes related to health and safety at work: manslaughter and serious or very serious injuries, committed with negligence, in violation of accident prevention regulations and on the protection of hygiene and health at work;
- money laundering crimes:
- computer crimes/ crimes against industry and commerce/copyright crimes.
- Those crimes must have been committed by:
- top managers / directors;
- persons managed and supervised by the top managers / directors.
- Those individuals must have committed such crimes in the interest or for the advantage of the entity.
The administrative liability of the entities may lead to:
- pecuniary sanctions
- prohibitive sanctions that affect the company’s day-to-day operations and jeopardizing the company’s image and relationship with investors.
How to avoid liability?
Complying with the organizational model provided for in Italian Legislative Decree 231/2001, which contemplates a form of exemption from liability for companies that:
- adopt an adequate ORGANIZATION, MANAGEMENT AND CONTROL MODEL aimed at preventing the risk of the commission of the so-called “premises-crimes”.
- appoint a SUPERVISORY BODY to ensure application, compliance and update of rules defined by the company in the Model.
- demonstrate that the crime was committed by a person who FRAUDULENTLY AVOID the rules of the model;
- demonstrate that there was NO OMITTED SUPERVISION by the supervisory body in charge.
If the model is adopted after the crime is committed, the company may benefit from exemption from certain more serious penalties or, in any case, a reduction in penalties.
How to adopt a model which comply with the Italian Legislative Decree 231
1. Risk mapping
The prerequisite for outlining a stable Organization Model is to identify the business activities in which there is a risk of crimes commission, to get acquainted with the “substantial activities” that need to be regulated.
To this end, it is necessary to carry out a mapping of the activities with substantial risk of crime commission, the so-called “Risk Assessment”: a document in which, for each identified at-risk activity, are also defined examples of “substantial activities”, the company functions involved, the possible related offenses, examples of possible ways in which the offenses can be carried out and company processes potentially linked with the offenses.
2 – Personalized Organization Model
After the Risk Assessment, the company will be assisted in the preparation of a personalized Organization, Management and Control Model tailored to its own corporate structure. The Model consists of:
- a general part, which reports the basic outlines of Italian Legislative Decree No. 231/2001
- a special part, dedicated to the prevention of premises-crimes;
- additional specific Behavioral Protocols;
- the Ethics Code, which identifies the general principles of a proper business ethics.
3 – Supervisory Body
In order to ensure the concrete functioning of the Model, an autonomous and independent Supervisory Body is established, which:
- supervises compliance with the Model and its effective implementation;
- supervises the validity of the Model, adapting it to legislative amendments and changes in the corporate structure;
- plans or ensures information and training activities on the main important contents of the Model.
- organizes periodic audit to detect the possible commission of crimes which may be relevant according to Italian Legislative Decree 231/2001.