Resignations of statutory auditors do not exclude their liability

The Italian Supreme Court[1] confirmed a principle recently set forth by the same court, stating that resignations of the members of a board of statutory auditors are not sufficient to exclude their liability in the case of unlawful actions carried out by the directors of the company.

Indeed, the court clarified that to comply with their corporate duties statutory auditors must actively fight, redress, and prevent illegal activities on the part of directors. Not only can resignations not be deemed sufficient remedy to exclude statutory auditors’ liability, but in certain cases resignations may even be considered indicators of auditor misconduct.

In the case at hand, the court emphasized that (i) when internal corporate remedies are not sufficient, auditors must report irregularities relating to the management of the company to the Public Prosecutor directly and (ii) should they not do so and simply resign, they can be considered liable for violation of their control and oversight duties.

You can find the judgment of the Supreme Court at this link.

[1]Judgment No. 32397/2019

Follow us on