Responsibility of the Board of Directors
The Supreme Court tightens the noose on board members without delegations.
Even board members are at risk of liability for tax offenses and preventive seizure of assets.
The expansion of tax crimes in the list of offenses that give rise to the liability of entities (companies) under Legislative Decree no. 231/2001 has multiplied (tripled) the sanctioning response of the State in case of tax crimes (tax penalty for the company, offense for the administrator, 231 violation for the company). The Supreme Court has recently intervened on tax offenses with two strict interpretations of the legislation. Among the legal principles introduced, it is worth noting the important distinction between companies governed by boards of directors with or without delegations. This information is significant and directly influences the chain of responsibility for anyone sitting on a board of directors.
1. According to a recent ruling (Supreme Court, Criminal Section 3, Sentence No. 11087087, 28.03.2022), if a specific management act does not fall within the expressly delegated powers, all board members are liable for the offenses, burdened with joint liability for the offenses deliberated or committed by the board of directors. The only exception is if a dissenting board member expresses their opinion in contrast on record. Only in the case of specific delegations to one or more directors will the liability be confined to their legal sphere. The Court anchored its decision to the interpretation of Article 2392 of the Civil Code, which states that administrators within joint-stock companies assume a position of guarantee, resulting in joint liability towards the company for damages arising from non-compliance with the duties imposed by law or by the bylaws. The only exception is for attributions specifically assigned to an executive committee or specifically assigned to one or more individuals (Article 2381, paragraph 2, Civil Code). In this case, within the Board of Directors of a Consortium, no delegations had been assigned to any of the directors. The Supreme Court first reiterated the reduction of burdens and responsibilities for directors without delegations (resulting from the 2003 reform), who no longer have a general duty of oversight over the overall management but are replaced by the obligation to act in an informed manner and gather information. With this premise, the Court specified how this regime only applies in the presence of delegated matters, either to the executive committee or to one or more directors. In the absence of delegations to any of the members of the board of directors (in this case, regarding tax-fiscal obligations), it must be assumed that joint liability for offenses deliberated or committed by the board of directors falls on all the directors, with each of them being jointly responsible.
But the Court went further. When deciding on the legitimacy of a preventive seizure ordered on the “primary residence” of a board member, it affirmed that the limits on real estate expropriation provided for the tax authorities (Revenue Agency) for tax debts do not apply to tax offenses (Presidential Decree no. 602 of 29.09.1973, Article 76, paragraph 1, letter a); Article 52, paragraph 1, letter g), Legislative Decree no. 69 of 21.06.2013). Therefore, there are no limits on the adoption of criminal confiscation, direct or equivalent, nor on the preventive seizure aimed at it (Supreme Court, Criminal Section, Sentence No. 8995, 07.11.2019, Rv. 278275-01; cf.: Supreme Court, Criminal Section, Sentence No. 30342, 16.06.2021, Rossi, Rv. 282022-01).
Indeed, the object of confiscation is the proceeds of the crime and not the debt to the tax authorities. These two concepts are distinct. The proceeds of crimes related to tax evasion, (such as through false or fraudulent declarations or non-payment), can be subject to preventive seizure for the purpose of confiscation. It consists of the economic savings resulting from diverting the evaded amounts from their intended tax destination and does not include the penalties imposed as a result of the debt assessment, which represent the cost of the crime itself. Furthermore, it does not include the interest accrued in favor of the state. On the other hand, the debt to the tax authorities always includes the original tax debt, interest, and penalties.
2. Here is another recent court ruling on tax crimes. In this case (Supreme Court, Criminal Section, Sentence No. 11086, 28.03.2022), the recipient of the preventive seizure measure was the de facto administrator of a company that was placed under extraordinary administration.
In summary, the public prosecutor had requested the preventive seizure of the administrator’s assets. Meanwhile, the OMISSIS s.r.l. company was undergoing an extraordinary administration procedure. After declaring insolvency, the special administrator found approximately 400,000 euros in the company’s coffers, which represented the down payment on the purchase price made by the prospective buyer of part of the company’s assets. Before the start of the procedure, the special administrator found either negative or negligible balances in the company’s bank accounts, excluding the initial down payment. Based on this premise, it was concluded that the amount found in the company’s coffers was not related to or attributable to the disputed omissive tax crime’s proceeds. These funds were generated after the commission of the crime. Consequently, the Court of Review deemed that the proceeds of the tax crime were not traceable in the company’s coffers and thus justified the equivalent seizure against the offender, namely the administrator of the company.
As known, in tax crimes, the proceeds are not constituted by an increase in assets but rather by a failure to decrease, by a saving of expenses (taxes). Therefore, the funds that entered the company’s coffers after the commission of the crime cannot be subject to direct confiscation. Additionally, the Court made another important consideration. The extraordinary administration procedure, unlike “ordinary” insolvency procedures (bankruptcy and preventive arrangement), is a “rescue procedure” aimed at protecting productive units, maintaining employment levels, and restoring and restructuring the company. Consequently, the Court concluded that the preventive seizure in penal-tax matters concerning extraordinary administration should be different from insolvency procedures, as the principle of seizure’s precedence over the assets under special administration does not apply. In the specific case, the precedence of seizure did not apply to the sum of 400,000 euros found in the coffers after the start of the procedure.
As reiterated, the money that flowed into the accounts after the commission of the crime (including on an account opened by the special administration) cannot constitute the proceeds of the tax crime, which consists of the tax savings resulting from the non-payment. Therefore, the preventive seizure for equivalent confiscation of the administrator’s assets was considered legitimate. Moreover, the Court deemed the confiscation measure applied to the personal assets of the individual (the administrator) for a crime (such as tax crime) committed for the benefit of a different legal entity, namely the company, as lawful. The impossibility of directly executing confiscation against the legal entity is thus considered a prerequisite for the operability of the equivalent confiscation against the individual who did not benefit from the proceeds but committed the crime that generated such proceeds. It is important to note that the punitive aspect of the value confiscation is aimed at discouraging illicit activities designed to unjustly enrich oneself economically based on the principle that “crime does not pay.” The administrator of a legal entity, whether de jure or, as in this case, de facto, knows or should know that by committing a crime, in the event of conviction, they will face a plurality of sanctions, associated with their unlawful behavior, all collectively incorporated into the incriminating norm. Among these sanctions, the confiscation for equivalent constitutes only an optional one because it is subject to the impracticability of specific confiscation, which is the primary normative choice. Consequently, when all the constitutive elements of individual responsibility exist, the assessment of the legitimacy of the imposed real sanction cannot be framed in the perspective of a “de-responsibilization” of the individual solely because the proceeds of the crime benefited the corporate entity (not the author of the crime) and cannot be recovered in another way.
The author’s (organizational relationship) to the entity constitutes an essential starting point for the overall criminal situation. It is precisely the criminal act, in its objective and subjective components, manifested in conduct carried out in the interest or for the benefit of the entity, that produces the benefit in favor of the legal person, allowing it to pocket the proceeds of the crime (in the case of certain tax crimes, in the form of expense savings). Since the assets of the entity cannot be directly targeted due to lack of capacity at the time of the seizure request, and since the entity itself cannot be subject to equivalent seizure, the only legitimate possibility remaining, as provided by the legal system, is the sequestration of the administrator’s assets (whether de jure or de facto). In this regard, there is no issue of proportionality, as the legal framework strictly limits the patrimonial sacrifice to the amount of profit obtained from the commission of the offense, represented by the failure to make the necessary payment to fulfill the tax obligation (Supreme Court, Criminal Section 3, Sentence No. 11086, 28.03.2022).
In conclusion, there is no escape for the administrator, even for crimes committed for the benefit of the entity, such as tax crimes.
