A brief introduction to D.LGS. 231/01

Legislative Decree 8 June 2001 no. 231 (hereinafter may be described as the “Decree”), regarding the “Standards governing the administrative liability of legal entities, companies and associations including those without legal personality”, was issued pursuant to the delegated powers under Section 11 of Law no. 300 of 29 September 2000. 

The Decree brought Italian regulations concerning liability of legal persons in line with the principles contained within: i) the Brussels Convention of 26 July 1995 on the protection of European Community financial interests, ii) the Brussels Convention of 26 May 1997 on the fight against corruption of public officials both in the European Community and in Member States, iii) the OCSE Convention of 17 December 1997 on the fight against corruption of foreign public officials in economic and international 
operations. 

This Decree therefore introduced into the Italian legal system the concept of administrative liability (referring substantially to criminal liability) applicable to entities (to be understood as companies, associations, consortiums, etc., hereinafter described as “Entities”) for certain offences, strictly defined by the Decree, committed in the interests of or to the benefit of the said Entities, (i) by individuals holding functions of representation, administration or management in the said Entities or by an organizational unit of these same having financial and functional autonomy, or by natural persons exercising, even “de facto”, management and control of the said Entities (“top management”) as well as (ii) by individuals subject to the direction or supervision of one of the persons indicated above (“subordinates”). 

This liability is additional to the (criminal) liability of the natural person who materially committed the offence. 

This extension of liability aims to extend sanctions for certain criminal offences to Entities that have benefited, directly or indirectly, from commission of the offence. 

The Decree provides for two categories of sanction: financial (to a maximum of around € 1.5 million) and restraining disqualification from carrying out business activities; suspension or revocation of those permits, licences or concessions which 
were/are functional to commission of the offence; ban on contracting for work with the Public Administration, except for obtaining public services; exclusion from public aid, financing, grants and subsidies and revocation of those already granted; ban on advertising goods or services).

The liability envisaged by the Decree also covers offences committed abroad by an Entity having its main offices in Italy, except where the State in whose territory the offence was committed proceeds on its own account. 
The Decree lists specifically the relevant offences, which alone may imply liability for the Entity: offences against the Public Administration (articles 24 and 25); IT crimes and illegal data handling (art. 24-bis); organized criminal acts (art. 24-ter); crimes regarding forgery of money, instruments of public credit and tax stamps, and instruments or signs of identification (art. 25-bis); crimes against industry and against business (art. 25-bis.1); corporate crimes (art. 25-ter); terrorist offences and offences aimed at subverting the public order (art. 25-quater); female genital mutilation (art. 25-quater.1); crimes against the individual (25-quinquies); crimes of market abuse (art. 25-sexies); manslaughter and serious or very serious injuries as a result of negligence in breach of occupational health and safety regulations (art. 25-septies); receiving stolen goods, money laundering and handling money, goods or other assets of illegal origin (art. 25-octies); transnational crimes (art. 10 L. 146/06); intellectual property crimes, inducing others not to issue statements or to issue deceitful statements to the Judicial Authorities (art. 25-novies). 

The sanctions, whether financial or restraining, pursuant to art. 26 of the Decree, are reduced by between a third and half where commission of the offences was only attempted, but the Entity is not liable when it voluntarily impedes the action from being committed or the event from taking place. 

A specific form of exemption from the said liability is envisaged by article 6 of the Decree when, in the case of an offence committed by a top management individual, the Entity can demonstrate:

1. that it had adopted and effectively implemented, prior to commission of the offence, an Organizational, Management and Control Model capable of preventing commission of the offences that occurred; 
2. that it had entrusted an internal organism (the so-called Supervisory Body) with monitoring the actual effectiveness of the Model and its updating; 
3. that the persons committed the offence by fraudulently eluding the provisions of the said Model; 
4. that supervision by the body as of letter b) was neither lacking nor insufficient.

If the offence has been committed by a top management individual the Company itself shall have the burden of proving its non-involvement with the actions committed. If, however, the offence is committed by an individual subject to the management or supervision of others, the Entity shall be deemed liable only if commission of the crime was made possible by failure to comply with the obligations of management and upervision (art. 7). In any case, failure to comply with the obligations of management and supervision is ruled out if the Entity, prior to commission of the offence, adopted and 
effectively implemented an Organizational, Management and Control Model capable of preventing offences of the type that occurred (art. 7 paragraph 2). 

Effective implementation of the organizational Model implies:

1. periodical review and, where necessary, updating of this same if significant breaches of its provisions are discovered or in the event of organizational or operational changes; 
2. a disciplinary system capable of sanctioning failure to comply with the measures indicated in the Model.