Auditors, limited liability creates problems of consistency

Limited culpa in vigilando damages for statutory auditors who, in the event of culpable conduct, also relating to statutory audit activities, are indemnified up to a ceiling calculated as a multiple of the remuneration received; and prescription in five years from the filing of the liability action report. These are the points discussed in detail in Assonime's Circular 18, released yesterday, which analyses the new Article 2407, which has significantly changed the liability regime for statutory auditors.

Automatic joint and several liability with the directors has been eliminated and a ceiling has been introduced on the compensation due, in the event of culpable breach of duty, parameterised to the remuneration received (15 times up to EUR 10,000, 12 times between EUR 10,000 and 50,000, 10 times over EUR 50,000). The declared objective is to more closely correlate the control functions actually performed by auditors with their financial exposure. A choice that, in Assonime's opinion, raises significant consistency problems. The new regime is, in fact, different from the one envisaged for other figures with similar duties (statutory auditors), who still do not benefit from any limit on liability, despite performing substantially comparable functions. However, a draft law is already under discussion that extends the cap to auditors as well.

Imbalances are found in the alternative administration systems: in the two-tier model, the supervisory board continues to be jointly and severally liable to an unlimited extent, and in the one-tier model, the members of the management control committee are subject to the general regime of Article 2392, that of the directors. In the traditional system, an asymmetry is created between auditors and non-executive directors who, although they perform an essentially monitoring function and have less information powers, do not enjoy any limitation of liability.

Assonime focuses on the liability of the board of statutory auditors when it also acts as a supervisory body (SB) pursuant to Legislative Decree 231/2001. Generally speaking, the SB is considered an internal office of the company, normally not subject to independent liability. However, when the board of auditors cumulates the two functions, the two spheres of activity tend to overlap. In such cases, the breach of supervisory duties in respect of the organisational model - which is an integral part of the internal control system - may also result in a breach of the typical duties of the statutory auditor, generating liability under Article 2407.

When the auditor's harmful conduct results from the breach of his duties in relation to the directors' conduct, the case-law principles on omitted supervision will continue to apply, even in the absence of automatic solidarity with the directors.