The main arguments used by the Supreme Court in its decision are the following:
- (i) the definition of “company” contained in the provision of the law setting forth the above-mentioned “principle of independence” must be deemed to be inclusive of the panel of statutory auditors due to the important role of the latter body within the governance structure of a company;
- (ii) even if, from a formal standpoint, the panel of statutory auditors and the external auditors are in charge of different tasks (i.e., (a) the panel of statutory auditors performs “internal” control, by checking whether the company is managed in compliance with the rules of law and those rules set out in the company’s by-laws and if the company’s organizational, management and accounting structure is appropriate; (b) the external auditor performs “external” control over the company’s financial statements), in certain cases there is a strong connection between such activities. Indeed, the panel of statutory auditors is also involved in the procedure to approve the financial statements (i.e., it must illustrate the financial results to the shareholders and make comments and proposals on the content of the financial statements);
- (iii) the procedures used to appoint and revoke external auditors involve the panel of statutory auditors: (a) external auditors are appointed by the shareholders’ meeting based on a reasoned proposal from the panel of statutory auditors and (b) the panel of statutory auditors must be heard before external auditors are revoked for cause.
The judgment of the Italian Supreme Court is available at the following link: https://bit.ly/2myPm8x