This contribution, prepared by Avv. Niccolò Medica, was published in N&T Plus Diritto – Il Sole 24ORE.

The Court of Cassation, with judgment no. 24045 of 6 September 2021, reviewed the characteristic features of the civil liability of auditors, focusing in particular on the relationship between such liability and acts of mismanagement committed by administrators.
Article 2407, paragraph 1, of the Italian Civil Code provides that auditors are obliged, as a rule jointly and severally with each other, to compensate for damages attributable to the failure or negligent performance of their duties: this is the so-called “exclusive” liability.
On the other hand, pursuant to Article 2407, paragraph 2, of the Italian Civil Code, auditors are also liable, jointly and severally with the administrators, for the acts and omissions of the latter if the damage would not have occurred had the auditors themselves exercised supervision in accordance with the obligations arising from their office.
The Supreme Court identified the prerequisites of this second form of liability, known as “concurrent” liability: “i) the commission, by the administrators, of an act of mismanagement; ii) the causal derivation from such act of damage to the company pursuant to Article 2393 of the Italian Civil Code, or to the company’s creditors pursuant to Article 2394 of the Italian Civil Code (Article 2407 of the Italian Civil Code, paragraph 3); iii) the failure of the auditors to supervise the actions of the administrators, in violation of the duties imposed on them by law (Article 2403 of the Italian Civil Code); iv) the derivation of damage from the omitted or inadequate supervision of the administrators’ actions by the auditors“.
The Court further clarifies that in the event of an act of mismanagement by the administrators, the auditors, in order to be exempt from liability, cannot limit themselves to recording their dissent in the minutes of the board of auditors’ meetings, but must also: “a) request, if necessary in writing, information and clarifications from the board of directors regarding the progress of company operations or on specific matters (see Cass. no. 5263 of 1993); b) proceed at any time, even individually, to acts of inspection and supervision, if necessary availing themselves, under their own responsibility and at their own expense, of their own employees and auxiliaries; c) convene and participate, as is their obligation, in the meetings of the board of directors (Article 2405 of the Italian Civil Code), record any dissent in the book of board meetings and resolutions, and challenge resolutions affected by nullity or voidability; d) convene (Article 2406 of the Italian Civil Code) and participate, as is their obligation, in the shareholders’ assembly (Article 2405 of the Italian Civil Code), as well as challenge assembly resolutions that were not adopted in accordance with the law or the articles; e) file reports with the Public Prosecutor, so that the latter may proceed pursuant to Article 2409 of the Italian Civil Code, when such initiative has truly remained the only practicable option in concreto to legitimately put an end to the management illegalities found“.
The Court of Cassation thus affirms that the auditor, while not automatically liable by virtue of his or her position of guarantee for every harmful corporate act, is required, for the purposes of exemption from liability, to exercise or attempt to exercise “the entire range of investigative and preventive powers entrusted to him or her by law“, and must therefore perform as soon as possible every act necessary to fulfill the assignment with diligence, correctness and good faith, and by activating every power of solicitation and direct reporting, both internal and external. Otherwise, the auditors may be liable for the civil wrongdoing committed by the company’s administrators due to the failure to exercise the supervisory powers-duties attributed to them by law.
Finally, with regard to the subjective element, the Court of Cassation emphasizes that negligence is relevant in the dual sense of “negligence in knowledge” and “negligence in failure to act”. Indeed, the two complementary moments to be considered are, on the one hand, the representation of the event in its unlawful scope, which is independent of the manner in which the auditor becomes aware of it, and, on the other hand, the awareness of not intervening with actions aimed at preventing the continuation, reiteration or aggravation of the event itself.