DOES CANCELLATION FROM THE REGISTER FOLLOWING JUDICIAL LIQUIDATION OF COMPANIES EXTINGUISH THE OFFENCE PUNISHABLE UNDER LEGISLATIVE DECREE 231/2001? THE COURT OF APPEAL DISAPPLIES THE MOST RECENT JURISPRUDENTIAL ORIENTATION OF THE COURT OF LEGITIMACY.
With sentence no. 1419/2023, the Court of Appeal of Milan, ruling on the liability of entities for criminal offences pursuant to Legislative Decree 231/01, declared that there was no need to proceed against a company that was cancelled from the Company Register following liquidation.
In particular, the Court of Appeal of Milan, taking up a previous case law of the Court of legitimacy, established that “on the subject of the criminal liability of entities, the physiological and non-fraudulent extinction of the entity determines the extinction of the offence provided for by Legislative Decree no. 231 of 8 June 2001, recurring in a case similar to the death of the defendant“.
Consequently, it has deemed that, like death, it would make no sense to sanction a subject who no longer exists, ‘as the trial would be unnecessarily conducted, with an uneconomic waste of time and energy‘.
The decision to apply the rules on the death of the defendant set out in Article 69 of the Code of Criminal Procedure is based on the fact that Legislative Decree 231/2001 only regulates the events inherent in the transformation of the entity referred to in Article 70, i.e. the merger or demerger, but not its extinction, which can therefore only be dealt with by applying the rules of criminal proceedings for natural persons pursuant to Article 35 of Legislative Decree 231/2001.
The Court of Appeal of Milan also wanted to emphasise that the sanctions applied to entities, like those applied to individuals, must also fulfil the traditional retributive and re-educative function referred to in Article 27 of the Italian Constitution, which sets out the fundamental principles in criminal matters.
This is because, in the context of the liability referred to in Legislative Decree No. 231/2001, since no objective liability is envisaged, entities are punishable only in the event of ‘fault of organisation’, i.e., in the presence of an organisational structure that is objectively negligent in adopting the necessary precautions to prevent the commission of offences.
In the present case, according to the Court, the sanction would lose the purposes set out by the constitutional principle since no educational effect would be possible given the supervening non-existence of the subject, just as the more markedly retributive function would end up being borne by the beneficiary shareholders of the final liquidation balance sheet, individuals other than the one on whom the sanction would be imposed.
The ruling in question is of fundamental importance since the Judges of merit decided to apply a case law of the Court of Cassation that seemed to have been superseded, by virtue of the most recent rulings in which the Court of Cassation had, on the contrary, established that “the cancellation of the entity from the register of companies does not determine the extinction of the offence provided for by Legislative Decree. 231 of 8 June 2001, committed in the interest and to the advantage of the same” in that “the extinction of the legal entity follows the direct transfer of the ownership of the company to the individual shareholders, since the relationships that arose prior to the dissolution do not disappear” (Court of Cassation No. 37655/2023).
We will see how and whether the Joint Sections will intervene on this point.
FAVOR PARTECIPATIONIS: WILL THE INTRODUCTION OF BONUS-AWARDING CRITERIA IN A PUBLIC TENDER PROCEDURE BY THE CONTRACTING AUTHORITY INFRINGE THIS PRINCIPLE?
In its judgement of 26 September 2023, no. 8512, the Council of State, Sec. III, expresses its opinion on the legitimacy of the bonus-awarding criteria for improved offers.
As is well known, the bonus-awarding criteria are the requirements that bidders prove to possess (in addition to the award requirements) and for which an additional score is envisaged for the purpose of awarding the tender.
The new Public Procurement Code (Legislative Decree No. 36 of 2023), under Article 108, expressly provides for the possibility of a greater bonus score in the event that ‘in order to promote gender equality, the contracting stations shall provide in the calls for tenders, notices and invitations, for a greater score to be awarded to companies for the adoption of policies aimed at achieving gender equality proven by the possession of the gender equality certification referred to in Article 46-bis of the code of equal opportunities between men and women, referred to in Legislative Decree no. 198 of 11 April 2006‘. In all other cases, on the other hand, the administrating body has the right to provide for them in the public tendering procedures, so much so that case law is now firm in stating that: “the contracting authority must be granted vast discretionary powers in order to establish the criteria and parameters for the evaluation of the offer from a technical point of view, through the foreshadowing of additional or bonus scores for professional knowledge and experience that can be certified (also by private parties, provided they are qualified), where this is justified in relation to the purpose pursued by the start of the selective procedure” (See. Council of State sec. V, 18/08/2023, no. 7811).
The Council of State recently returned to the subject, clarifying the boundaries and limits of introducing such criteria.
In this perspective, by means of judgment no. 8512 of 26 September 2023, the Judges of Palazzo Spada, affirmed that the Administration – although bound to the application of the principle of favor partecipationis, which safeguards free competition in public procedures and prevents contracting authorities from introducing rules that restrict the possibility for economic operators to submit suitable bids – may well adopt tender rules which, in exercising its discretionary powers in the matter, may guarantee the pursuit of the objective to provide the goods or services that are the subject of the tender in compliance with the principles of proportionality, reasonableness and non-extraneousness with respect to the subject of the procedure.
Moreover, in this respect, it should be recalled that the reason for public tendering consists precisely in supplying the administration, by means of the most advantageous of the possible contracts, with the works, goods or services that it actually needs in the general interest, and not merely providing the undertakings concerned with an opportunity to be modulated on their organisational preferences. Consequently, the possibility of introducing bonus-awarding criteria in compliance with the aforementioned principles also corresponds to this rationale.
DOES THE COURT-APPOINTED TECHNICAL ADVISOR HAVE OPERATIONAL LIMITS?
The Court-appointed expert must fulfil the task entrusted to him or her by following the perimeter of investigation indicated to him or her by the judge; sometimes the Court’s Expert takes investigative initiatives on his or her own that seem to exceed the perimeter; the advice is not always null and void if the principle of cross-examination between the parties is respected.
Ex officio technical advice is intended to help the judge in the evaluation of the elements acquired or in the solution of questions involving specific knowledge, it being understood that the party cannot invoke it to make up for its own evidentiary deficiencies.
The consultant appointed by the judge, within the limits of the investigations entrusted to him and in observance of the cross-examination of the parties, may acquire all the documents necessary for the purpose of answering the questions submitted to him, even disregarding the allegation activity of the parties, (See. Cass. Civ., Sez. III, 07/09/2023, n. 26144 in Giust. Civ. Mass. 2023 – conformi: Cass. Civ., Sez. II, 21/07/2023, n. 21903 Giust. Civ. Mass. 2023; Cass. Civ., Sez. VI, 31/08/2022, n. 25604 in Diritto & Giustizia 2022, 31 agosto; Cass. Civ. Sez. Un., 01/02/2022, n. 3086 in Diritto & Giustizia 2022, 2 febbraio).
In any case, the Court-appointed expert witness may not conduct verifications and investigations on facts not in the case or examine documents not produced in the trial without stimulating the necessary cross-examination between the parties (Corte appello, Napoli, Sez. VIII, 17/10/2022, n. 4290), otherwise, the investigation could be declared null and void for violation of the ousted party’s right of defence.
Still with regard to the operational limits of the investigation, the Court expert cannot initiate expert operations (or suspend them or, finally, resume them) without notifying the parties, under penalty of nullity of the consultancy itself.
It should be recalled, however, that if the party intends to raise an issue of nullity for the unlawful use of documents or otherwise, it must raise the relevant exception not through the party’s consultant – e.g. during the course of the expert’s operations – but through the defense counsel; as for the time limit for formulating said exception, according to the Supreme Court’s established orientation, it is necessary to object to the nullity of the advice “…in the first instance or hearing following the filing of the advice itself; regardless of whether said objection was made by the party’s expert witness during the expert’s work …” (Cass. Civ., Sez. I, 15/11/2023, n. 31744 in Diritto & Giustizia 2023, 16 November); it is, in short, a relative nullity.
According to part of the jurisprudence of legitimacy, the OTC may be supported by a coadjutor to carry out the task entrusted to him/her without the authorization of the judge: as is well known, the consultant may avail himself/herself of the work of specialists, in order to acquire, through the appropriate and necessary technical aids, all the elements of judgment, without the need for prior authorization of the judge, nor a formal appointment, provided that he/she assumes moral and scientific responsibility for the investigation and the conclusions reached by the collaborator (see. Cass. Civ., Sez. III, 29/03/2006, n. 7243 in Giust. civ. Mass. 2006, 3; conforme, più risalente, Cass. Civ. 08/03/1984 n. 1605).
The concluding report of the Court expert, whether they are filed at the conclusion of a preventive technical assessment or in the course of the ordinary trial, is freely appreciable and usable by the judge by comparing it with the other preliminary findings acquired in the course of the trial; in deference to the principle judex peritus peritorum, for the solution of questions of a technical nature, the judge is not obliged to follow the conclusions of the Court consultant, as he may well disregard them by following his own and autonomous reasoning and conviction; in fact, the judge who resorts to the aid of a technical consultant does not at all divest himself of his decisional powers.
PRIVACY: AN ASL WAS SANCTIONED FOR A HACKER ATTACK.
The Garante for personal data protection (“Garante”) has fined an ASL (or Local Health Authority) in the province of Naples for 30,000 euros following a hacking attack that affected more than 840,000 people, including patients and employees.
The Local health body (“ASL”) notified the Garante of a data breach, under Article 33 GDPR. The data breach was caused by a ransomware via cyber-attack, which infected the health institution’s network. The ASL stated that there were malfunctions related to the delivery of hospital and laboratory services.
The complex attack specifically affected the lists of users with administrator profiles, thereby blocking access to the ASL’s own IT. Specifically, the software and data of the main and backup data center platforms were affected, and also the relocated data centres for ER, ADT and diagnostic imaging application functions.
Access was via ASL staff credentials found on the dark web, which allowed, via VPN, system administrator privileges. A ransom was also demanded to restore the systems.
After the notification, the Garante proceeded with the necessary inspection activity, during which it found:
– the absence of adequate measures in order to detect the data breach and restore the security of the systems, in violation of the principle of privacy by design. Indeed, access was through an authentication procedure based only on the use of username and password;
– insufficient segmentation of the network facilitated the spread of the virus.
Such serious shortcomings from the point of view of security and privacy by design resulted in a violation of data protection regulations, and in particular those relating:
– to the principle of “integrity and confidentiality” referred to in Art. 5 of the GDPR;
– to the principle of “privacy by design” referred to in Art. 25 of the GDPR;
– to the security obligations set forth in Article 32 of the GDPR.
In quantifying the penalty, the Garante considered the significant number of data subjects (more than 840,000 people) and also the cooperative spirit of the ASL, as well as the non-intentionality of the data breach. Following the attack, moreover, measures were taken to limit the harm suffered by the data subjects and also to prevent the recurrence of similar incidents (such as two-factor authentication). Aggravating, on the other hand, the “sensitive” nature of the breached data, concerning the health of the data subjects, was found to be aggravating.
In conclusion, therefore, the ASL was fined 30,000 euros (an all-too-small sum, despite the seriousness of the incident) for violating the above regulations.
This event, which comes on the heels of a series of sanctioning measures by the Garante against entities belonging to the Public Administration and in particular to the National Health System (NHS), highlights a strong deficiency and lack of attention to data protection and cyber security regulations.
The principle of privacy by design is, and should be, above all a proactive approach to the protection of personal data, incorporating security measures and respect for privacy from the very beginning of the design of a system, product or service. The application of this principle must be geared toward preventing privacy breaches rather than addressing them later, promoting transparency and user control over their data.
GOOD NEWS ON THE ESTATE PLANNING FRONT.
October brought a couple of positive news for those who are planning the distribution of their assets.
First of all, with Circular No. 29 of 19 October, the Revenue Agency finally acknowledged that in the current Inheritance Tax system the so-called Reunion for Inheritance Tax purposes (coacervo successorio) is no longer applicable.
This is the obligation to add to the value of the estate the discounted value of the donations made during the lifetime of the deceased to the heirs and legatees. In the previous Inheritance Tax system, this rule meant to allow the application of the Inheritance Tax at progressive rates by brackets.
The Revenue Agency, having taken note of the case law of the Supreme Court, with Circular 29 finally acknowledged that the Reunion for Inheritance Tax purposes is deemed to be implicitly repealed, with the consequence that it can no longer be used for the purposes of calculating the Inheritance Tax nil rate band.
Therefore, in the absence of the Reunion, the value of the donations made by the deceased should no longer be added to the value of the estate, in order to apply the Inheritance Tax nil rate band of one million euros (for the benefit of the spouse and relatives in the direct line) or 100 thousand euros (for the benefit of brothers and sisters).
In practice, since the same nil rate band is provided for in the case of Inheritance Tax and Gift Tax, the absence of the Reunion allows the nil rate band to be doubled. Indeed, it is possible to apply the nil rate band for the purposes of the Gift Tax due for the donations received during the life of the donor and use it again upon his death for the purposes of the Inheritance Tax.
The Revenue Agency recognized the repeal of the Reunion for Inheritance Tax purposes, but the Reunion for Gift Tax purposes has not been touched, with the consequence that at the time of a donation it is always necessary for the purposes of calculating the Gift Tax nil rate band to take into account previous donations made to the same beneficiary, with the sole exception of donations made between 25 October 2001 and 28 November 2006 when the Gift Tax was not in force.
Another important novelty comes from the legislator who has expressed the intention (if not already with the budget law, in a subsequent bill) to abolish the action for restitution of donated assets that exceed the share due to the legitimate heirs (legittimari). The possibility of being subjected to such action has always limited the circulation of donated goods, save the possibility to stipulate an insurance contract to manage the risk.
DISCLAIMER: This newsletter merely provides general information and does not constitute legal advice of any kind from Macchi di Cellere Gangemi. The newsletter does not replace individual legal consultation. Macchi di Cellere Gangemi assumes no liability whatsoever for the content and correctness of the newsletter.
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