Liability of Directors of Capital Companies: Commentary on Order No. 10742 of 2024
The recent Order No. 10742 of April 22, 2024, issued by the Court of Cassation, offers important insights into the liability of directors of capital companies. In particular, the ruling clarifies how the unreviewability of the merits of management decisions can be limited by their reasonableness, a fundamental aspect for the protection of company creditors.
The Principle of Unreviewability and its Limits
Traditionally, the principle of unreviewability of management decisions is one of the pillars of Italian company law, as provided for by Article 2392 of the Civil Code. However, the order in question introduces a crucial element: the reasonableness of the decisions made by directors. In fact, as stated by the Court, unreviewability finds a limit in the ex ante assessment of the diligence of the mandatary.
LIABILITY - TOWARDS COMPANY CREDITORS In general. Regarding the liability of directors of capital companies, the unreviewability of the merits of management choices is limited by their reasonableness, to be assessed ex ante according to the parameters of the mandatary's diligence, taking into account the possible failure of directors to adopt the precautions, checks, and prior information normally required for that type of choice, and the diligence shown in previously assessing the risk margins connected to the operation to be undertaken, such that, once its unreasonableness has been verified, directors are liable for damages resulting from the caused insufficiency of company assets to satisfy the claims of the creditor class. (In this case, the S.C. confirmed the lower court's ruling, which had qualified, with a factual finding not subject to review in cassation, as an unreasonable act and a source of compensable damage, the directors' decision to gain control of another company by acquiring a severely indebted business unit).
Consequences of Unreasonableness
The Court upheld the lower court's ruling, which highlighted the unreasonableness of the directors' decision to acquire a severely indebted business unit. This choice, considered a violation of their duty of diligence, led to compensatory liability towards company creditors. It is essential for directors to adopt precautions and accurate assessments before undertaking operations that could compromise the company's financial stability.
- Importance of diligence in business management
- Need for prior checks
- Assessment of risks associated with management decisions
Conclusions
Order No. 10742 of 2024 represents an important step forward in protecting the rights of company creditors, highlighting how the unreviewability of management decisions cannot be an alibi for unreasonable behavior. Directors must act with diligence and responsibility, always considering the impact of their decisions on the company's economic health and creditors' rights. Jurisprudence continues to outline a regulatory framework in which directors' liability is increasingly scrutinized, requiring a prudent and informed approach in the management of capital companies.
