ITALY Law and Practice Contributed by: Francesco Di Carlo and Filippo Raynaud, FIVERS Studio Legale e Tributario
In an SPA with the so called “traditional” governance model, the board of statutory auditors is required to conduct the audit of the financial statements, unless an external auditor is appointed. An SPA appoints an external auditor voluntarily or when required to pursuant to applicable law (eg, the company (i) has issued instruments listed on a regu - lated market; (ii) is required to prepare consolidated financial statements, (iii) is a regulated entity, (iv) is controlled by, controlling or jointly controlled by, an entity indicated under previous letters (i)–(iii)). The relationship between the company and the exter - nal auditor is governed by a set of statutory, contrac - tual, and professional rules, which contemplates for instance: • the appointment by the shareholder meeting based on a proposal of the board of statutory auditors; • the maximum length of each appointment, different for non-listed and listed companies and companies operating in specific sectors); • cases in which the appointment of an external auditor may be revoked for cause; • duties of diligence and care; and • relations with the board of statutory auditors. Considering the limitations applicable to an SRL’s ability to access the trading venues and to conduct regulated business, most often an SRL appoints an external auditor if it is controlled or controls a com - pany that is required to appoint an external auditor. 6.2 Risk Management and Internal Controls Under Italian law, geopolitical risk is not subject to a specific regulatory framework applicable to all com - panies.
listed SMEs (excluding so called “micro-enterprises”) and parent companies of large groups to prepare and publish a yearly comprehensive report on sustaina - bility, in accordance with the European sustainability reporting standards (ESRS), covering environmental and social impacts, governance frameworks, sustain - ability-related risks and opportunities, and strategic objectives. The new legislation has introduced the role of the sus - tainability auditor, who is required to provide assur - ance on a company’s sustainability reporting, ensuring its accuracy and compliance with regulatory require - ments and standards like the European Sustainability Reporting Standards (ESRS). The schedule for the entry into force of the new report - ing obligations is different, depending on the different category of each relevant entity. Other than the new rules implementing the CSRD, there is not a general reporting obligation on ESG matters. However, companies may decide to voluntarily adopt ESG principles and provide periodic information on the implementation of such principles. Some com - panies may also decide to voluntarily adopt interna - tional standards such as the Global Reporting Initia - tive (GRI), Sustainability Accounting Standards Board (SASB) or the Task Force on Climate-related Finan - cial Disclosures (TCFD) to enhance transparency and credibility in their ESG communication. A company may also decide to include in its corporate purposes the pursuit of the interest of other stakehold - ers (ie, other than the shareholders), including those of the employees, clients, suppliers, creditors, public administration and society in general. Pursuant to a specific set of rules adopted by the Italian legislator (Law No 208/2015, paragraph 1, Sections 376 to 384), these companies may therefore adopt the status of so called società benefit , be included in special registry and become subject to specific yearly reporting (so called impact reporting), to be annexed to the annual financial statements
7. Environmental, Social and Governance 7.1 ESG Requirements
With the Legislative Decree No 125/2024, the Italian legislator has implemented the EU Corporate Sus - tainability Reporting Directive, or “CSRD” (Directive EU 2022/2464), which requires large companies and
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