Control body of SRL in Italy
The Collegio Sindacale and Revisore dei Conti
of the Società a Responsabilità Limitata
The Board of Statutory Auditors and other controllers of a limited company
The regulation on the control bodies of the s.r.l. is contained in art. 2477, second paragraph, of the civil code, it establishes the obligation to appoint the Control Body or an Auditor.
The appointment of the Control Body or Auditor is mandatory if the company:
a) is required to prepare consolidated financial statements;
b) controls a company obliged to audit statutory accounts;
c) has exceeded for two consecutive financial years at least one of the following limits:
- total assets in the balance sheet: € 2 million;
- revenues from sales and services: € 2 million;
- employees employed on average during the year: 10 units;
in any case, the appointment of the Control Body or the Auditor in the cases listed above is no longer mandatory when for three consecutive financial years, none of the aforementioned limits has been exceeded.
In the event that the s.r.l .:
- does not have a Control Body and
- the Shareholders' Meeting approves the financial statements, which exceed the limits indicated above;
in this case, the Shareholders' Meeting must arrange, within thirty days, to appoint the Control Body or the Auditor;
if the Shareholders' Meeting does not take action when indicated above, the court will appoint the Control Body or the Auditor, at the request of any interested party or upon notification of the business register officer.
Control Body (Board of Auditors or Sole Auditor)
The company's internal Control Body can be composed of a Board of Auditors (so called Collegio dei Sindaci) or a Single Control Boby Auditor (Sindaco), it has preventive control functions.
If the statute of the s.r.l. does not provide the contrary, the Control Body is made up of one single effective member.
The Control Body performs the following tasks:
- participation in the meetings of the corporate bodies (Board of Directors and Shareholders' Meeting);
- acquisition of information even when the company has to take decisions;
- assessment of the adequacy and functioning of the company's internal control system according to both generic and specific risks;
- carrying out checks on at least a quarterly basis;
- reporting, denunciation and supervision of compliance with the law and the statute (legality check);
- possibly also carrying out the audit (if the articles of association provide for it).
The Auditor of Accounts (so called Revisore dei Conti)
The Auditor (Revisore) has the following characteristics:
- it is not a corporate body;
- is a professional who carries out his business at a later stage, generally on the accountancy;
- carries out specific reports.
The statute of the s.r.l. can provide that only one Auditor could be appointed.
Therefore, the possibilities for choosing available for shareholders when they are going to set up an s.r.l. are the following:
- appointment of the Board of Auditors (or Sole Contro Body Auditor, called Sindaco) with the role of auditing;
- appointment of the Board of Auditors (or Sole Control Boby Auditor, called Sindaco) and of the Auditor (Revisore dei Conti, which can be: either an auditing company or a single professional);
- appointment of the only Auditor (Revisore, which may be: an auditing firm or a single professional) who, in this case, does not, however, also perform the functions of Auditor.
Usually in the s.r.l. the partners are few, often family related to each other, and one of them is also sole director, while the other partners often have other positions (consultant, employee, commercial agent, etc.).
In this type of company, the presence of a statutory auditor does not develop any utility, on the contrary, it represents a kind of interference in the decisions of the sole director or of the Board of Directors.
It is recommended that the s.r.l. appoints only the Auditor (Revisore dei Conti).
Usually, the Revisore dei Conti fee is lower than that of the Sindaco.
Court complaint against administrators
Article 2409 of the Italian Civil Code states that, in any case, also with reference to companies without a Control Body, if there is a well-founded suspicion that the directors, in violation of their duties, have made serious irregularities in the management such as to cause damage to the company or to one or more subsidiaries, the shareholders who represent 10% of the share capital can appeal in court (the articles of association may provide for lower percentages of participation).
The court may order the inspection of the administration of the company at the expense of the requesting shareholders, subjecting it to the provision of a security (appeal against this decision is possible).
The court may not order the inspection and suspend the proceedings for a specified period if the Meeting of Shareholders replaces the directors and auditors with subjects of adequate professionalism, who take immediate action to ascertain whether the violations still exist and, if so, to eliminate them, reporting to the court on the investigations and activities carried out.
If the reported violations persist, the court can order the appropriate provisional measures and convene the Shareholders' Meeting to take the appropriate decisions and, in the most serious cases, can revoke the directors and also the auditors and appoint a judicial administrator, determining the powers and term of office.
The judicial administrator may bring liability proceedings against the administrators.
Before the expiry of his term, the judicial administrator:
- send a report to the court;
- convenes and chairs the Shareholders' Meeting for the appointment of new directors and auditors
- or, proposes the liquidation of the company or its admission to a bankruptcy procedure.
The measures provided for in this article can also be adopted upon request by the Control Body.