SOCIAL CORPORATE RESPONSIBILITY: THE NEW DIRECTIVE EXPANDS THE NUMBER OF COMPANIES SUBJECTED TO THE SUSTAINABILITY REPORTING FRAMEWORK AND INCREASES THE NON-FINANCIAL REQUIREMENTS.
On 28 November 2022, the Corporate Sustainability Reporting Directive (“CSRD Directive“) was formally adopted by the EU Council.
The regulatory act, waiting to be published in the EU Official Journal, facilitates the transition to a sustainable economy by helping the flow of non-financial information and increasing the companies’ requirements to disclose information about their social, environmental and governance effects.
The CSRD Directive acts by amending the following regulations:
(i) Directive 2013/34/EU concerning annual financial and consolidated financial statements;
(ii) Directive 2004/109/EU concerning the obligations of transparency applicable to issuers of securities;
(iii) Directive 2006/43/EC on annual accounts;
(iv) Directive 2014/95/EU about the European non-financial reporting;
(v) EU Regulation No. 537/2014 on specific requirements regarding the statutory audit of public interest entities.
Among the main new features introduced, we highlight the following:
1) Expansion of the number of companies subjected to the sustainability reporting framework.
The CSRD Directive provides that the sustainability reporting requirements are extended to:
– large public interest enterprises with more than 500 employees;
– large companies with more than 250 employees and/or more than EUR 40 million turnover and/or more than EUR 20 million balance sheet total;
– to companies listed on regulated markets, including small and medium-sized enterprises (SMEs), with the exception of micro-enterprises;
– to non-European companies with net revenues from sales and services exceeding EUR 150 million in the EU and having at least one subsidiary in the EU.
2) Obligations to certify sustainability information regarding environmental, social, and governance factors and greater detail in the sustainability reporting according to the mandatory European principles.
The sustainability reporting standards must consider the following information:
– on environmental factors: information regarding climate change mitigation, climate change adaptation, water and marine resources, resource use and circular economy, pollution, biodiversity and ecosystems;
– on social factors: information regarding equal opportunities for employees and programs to develop the skills of each of them, the conditions of work to which they are exposed, and respect for human rights;
– on governance factors: information regarding the role of the boards of directors and Statuary Auditors, management and control authorities, corporate ethics and culture, corporate political commitments, business relationship management, internal control and enterprise risk management system.
The reporting activities imposed to companies should be carried out according to the principle of “double materiality”: it means disclosing both information about the environmental and social risks they are exposed to, and the impacts caused by the company’s activities on the environment.
With a view to standardization and thus greater usability for third parties, information should be reported in the management report based on common reporting standards developed by the European Financial Reporting Advisory Group (EFRAG) and subsequently published in digital format.
These reports will then have to be certified by auditors or statutory auditors (in line with what is already required by Directive 2013/34/EU), who will have to acquire a high level of technical and specialized expertise in sustainability.
Transitional regime and entering into force
The Directive CSRD’s new obligations will be applied according to a multi-stage transitional regime. The regulations will enter into force as follows:
– in 2025 (communication on the financial year 2024) for large companies already subject to the Non-Financial Reporting Directive 2014/95/EU;
– in 2026 (communication on the financial year 2025) for large companies currently not subject to the Non-Financial Reporting Directive;
– in 2027 (communication on the financial year 2026) for listed SMEs (with the exception of micro-enterprises), small and non-complex credit institutions and insurance companies;
– in 2029 (communication on the financial year 2028) for non-European companies.
The CSRD Directive is another step (like the recent EU Regulation 2020/852, which identifies the criteria under which an investment can be considered environmentally sustainable) of the EU policy to integrate sustainability into the corporate organizational structure of economic operators.
The economic operators shall therefore actively integrate sustainability into their organization so that it is promoted throughout the entire value chain.
Always on the assumption that such initiatives should be interpreted not merely as mere compliance and burdens, but as promotion and development activities, given now the attention of many stakeholders (customers, media, investors) to the issue of environmental and social protection.
c.colamonico@macchi-gangemi.com
e.casciani@macchi-gangemi.com
LETTER TO SANTA CLAUS. ATTENTION TO WHAT (AND HOW) YOU DONATE.
As is well known, donations are considered as “anticipated testamentary wills” and, as such, they are provided for in the second book of the Italian Civil Code, whose object is the inheritance. Donations, exactly as any other testamentary will, can violate the rights of the so-called “necessary heirs” (spouse, sons and daughters or further descendants and, in the absence of them, parents and others) to receive their own legitimate share of heritage, which is fixed by the law, notwithstanding and also against any will of the testator.
Namely, where, by one or more donations, the heir’s legitimate share right has been violated, the heir him/herself may bring an action for reduction and obtain the allocation of the donated assets up to the amount of his or her rightful share.
The protection of the necessary heir is very strong and takes precedence over the rights of any third parties who have in the meantime acquired from the donee the real estate property object of the donation in question (up to twenty years after the donation and within ten years of the donor’s death). In other words, a person who has purchased a real estate property from a donation may be required to return such real estate property even after a considerable period of time, pursuant to Article 563 of the Italian civil code (this is the so-called “restitution in kind”).
The consequence is quite relevant, both on an individual level – for those who purchased the real estate property and would lose it – and on a general level – for the certainty of trades and the reliable movement of goods.
In this context, the problem arises in respect of the rules applicable in the case of a so-called “indirect donation”: that is, where a person has not donated a property, but has paid the purchase price of a property which he/her has, however, registered in the name of a third party who, therefore, becomes the owner of the property benefiting from the same result as a donation.
According to a first orientation (Court of Cassation 12.05.2010 no. 11496), Article 563 of the Italian Civil Code would not apply in the case of an indirect donation: while it is true that with an indirect donation the same effect is obtained as that of making a person benefit from the purchase of a real estate property, the economic operation is different provided that the donor never becomes the owner of the property, but only uses money to cause the beneficiary to acquire the property.
The necessary heir, therefore, cannot be satisfied on the real estate itself, but only on its countervalue in money.
Subsequently, however, the Supreme Court changed its attitude and deemed that the action for restitution provided for by Article 563 of the Italian Civil Code may be brought against third-party purchasers even where the real estate has been the subject of an indirect donation (Court of Cassation 11.02.2022 no. 4523). The necessary heir could therefore obtain from the third party the restitution in kind of the real estate.
Now, in a very recent judgment, the Supreme Court (no. 35461 of 2.12.2022) has readdressed the subject and criticising its own earlier ruling and has given, instead, continuity to the first orientation. Indirect donation, in conclusion, is assimilated from a substantive point of view to a true and proper donation, but the consequences and effects of such indirect donation, both for the necessary heirs and – this is probably the most relevant aspect – for third-party purchasers, are quite different.
Even in the midst of the Christmas spirit, in conclusion, it should always be considered that gifts have a precise legal framework, can entail significant problems and therefore must be properly prepared.
CORPORATE CRIMINAL LIABILITY UNDER THE LEGISLATIVE DECREE NO. 231/2001: IN THE ABSENCE OF SYSTEMATIC INFRINGEMENTS, MINIMAL COST SAVINGS CAN EXCLUDE THE LIABILITY.
With judgement no. 33976/2022, the Court of Cassation reiterated the interpretation of the criteria of interest and advantage relating to predicate offences committed with negligence, by specifying that, given the lack of systematic violations and in view of a ‘minimal’ advantage, limited cost savings can exclude the corporate’s interest and/or advantage and, consequently, the corporate liability, provided that the violation occurs in a context of general corporate’s compliance with all safety measures and does not fall within a significant area of risk.
On September 15th, 2022, the Court of Cassation published the grounds of decision of a very controversial judgment on the corporate criminal liability. The Court of Cassation’s intention is to avoid an automatic application of art. 5 of Legislative Decree no. 231/2001 (which provides that the entity is responsible for crimes committed, in its interest or for its benefit, by persons holding senior positions or their subordinates or by those who exercise management and control even de facto) since this would lead to the corporate’s immediate conviction for any lack of compliance with preventive measures even if they are isolated.
In the case at hand, the Court of Cassation was called on to rule about a judgement of the Court of Appeal of Venice which confirmed the first instance conviction of a company deemed liable for the offence resulting from a crime under art. 25 septies, paragraph 3 of Legislative Decree no. 231/2001, with reference to some serious injuries sustained by an employee during the performance of his duties.
In that specific case, the company had been convicted by the court of merits, of an infringement of work safety rules, committed by the chairman of the board of directors in relation to a crime referred to under art. 71 of Legislative Decree no. 81 of 2008, on the grounds of negligence, imprudence, and malpractice, for giving the worker equipment that lacked in safety requirements. In this case, such infringement resulted from an accident that occurred at work to a seasonal worker who slipped on the wet floor and accidentally put his left hand inside the grape harvesting basin, which lacked the required protective grid.
On the other hand, the corporate liability, with respect to the predicate offence, arose from the advantage of the cost saving obtained through its failure to install the above-mentioned safety device. Such circumstance had been deemed as sufficient to claim the objective criterion of the entity’s chargeability, insofar as it was connected to its non-compliance with any precautionary measures. In particular, the court of merits ascertained a cost saving of € 1,860.00, which certainly was minimal if compared to the higher amount allocated for the adjustment of the accident prevention system, but nevertheless substantial.
Therefore, the company appealed the decision before the Court of Cassation claiming the existence of defects essentially related to the modalities through which the advantage under art. 5 of Legislative Decree no. 231/2001 occurred especially in cases where there is no systematic violation of workplace safety regulations.
The Court of Cassation, first referred to one of its principles contained in a recent judgment to highlight that “for the purposes of the corporate criminal liability, it is not necessary a systematic infringement of workplace safety rules”, since such liability may be inferred also in case of occasional violations if there is factual evidence of the connection between the infringement and the corporate’s interest.
Subsequently, the Court referred to the principle that was also the subject-matter of a previous decision, so-called “Canzonetti” judgment, which established that “the minimal amount of savings may be relevant to exclude the interest and/or advantage and, therefore, the corporate liability, whenever the infringement occurs in a context of general compliance by the company with the workplace safety regulations”. However, the Court deemed it opportune to limit the application of this principle exclusively to the case where the infringement does not fall within a significant area of risk, because “otherwise it would be very difficult to argue the lack of fault in the organisation with respect to an infringement of a precautionary measure essential for the proper functioning of the safety system“.
The Court of Cassation, consequently, by applying the above-mentioned principles, rejected the appeal deeming the requirement of minimal saving as non-existent, and specifically highlighting that despite the lack of systematic violations and the minimal savings for the company, the infringement of the aforesaid precautionary measure was essential to the proper functioning of the safety system of an entire work area. Therefore, in this case it is not possible to claim the lack of fault in the organisation.
m.divincenzo@macchi-gangemi.com
a.buttarelli@macchi-gangemi.com
CHALLENGE OF RULINGS BY THE DEFAULTING PARTY: THE SHORT-TERM TIME LIMIT FOR CHALLENGING.
The rule is simple: the defaulting party’s time limit for challenging a ruling shall runs from the moment when it has knowledge of the adverse ruling. The rule applies both to ordinary civil proceedings (art. 163 and ff. of the Italian Code of Civil Procedure) and to summary judgement proceedings (art. 702 bis and ff. of the Italian Code of Civil Procedure). Let’s consider both cases.
In the ordinary civil proceedings, the short-term time limit for challenging the ruling shall not run until the defaulting party is notified personally with the adverse decision: this provision is set forth by article 292, last paragraph of the Italian Code of Civil Procedure. The rule applies both in the case of notification of the ruling alone (according to article 326 of the Italian Code of Civil Procedure) and in the case of notification of the decision together with the act of enforcement (article 479 of the Italian Code of Civil Procedure). In other words, in line with established case-law, it does not matter the reason why the ruling has been notified, what really matters is that the defaulting party has the legal knowledge of the decision by the notification (see Italian Civil Supreme Court, Section II, 05.04.1996 no. 3188 in Giust. Civ. Mass. 1996, 510).
For the sake of a complete information, it should be noted that, according to a different and apparently contrary case-law applicable to the party duly appeared before the Court, the “…ruling’s notification for enforcement purposes (specifically, along with the act of enforcement) addressed to the party personally and not to its attorney according to article 170 para. 1 and art. 282 of the Italian Code of Civil Procedure, is enough to let the short-term time limit for challenging run, whether in the interest of the notifying party or in the interest of the notified party …” (see Italian Civil Supreme Court, Section III, 13.08.2015 no. 16804; Italian Civil Supreme Court, Section III, 10.06.2010 no. 16804).
Similar principles govern the challenging of the decisions rendered at the end of the summary judgement proceedings: for the party who regularly appeared, the short-term time limit to challenge the decision according to article 702 ter para. 6 of the Italian Code of Civil Procedure shall run both by means of the notification by the other party and by means of the communication of the decision sent by the Court clerk’s office; the deadline for challenging is 30 days.
For the same reason, if the decision is rendered during a hearing and the losing party has already entered the proceedings, no communication or notification will be necessary since the party is presumed to have knowledge of the decision in accordance with art. 172, para. 2 of the Italian Code of Civil Procedure.
On the contrary, if the decision is not ruled during a hearing, the time period of 30 days for the challenging shall run from the date of the service of the decision by the Court clerk’s office (see article 702 quater of the Italian Code of Civil Procedure, see also Italian Civil Supreme Court, Section II, 14.07.2021, no. 20071).
For the defaulting party, the 30 days’ time shall run only after receiving the service of the decision by the winning party; thus, the fact that the decision rendered has been issued during the hearing or not, is irrelevant. Whenever the decision is not notified to the defaulting party, article 327 of the Italian Code of Civil Procedure shall apply. Therefore, the long-term time limit for challenging will apply and it will run from the date of the publication of the ruling.
A distinction should be made for the “accidental” defaulting party when the defendant is wrongfully considered defaulting party by the judge, who has failed to detect any defects in the subpoena or in the notification of the latter; when it happens, the long-term limit for the challenging may expand considerably when the invalidity of the service occurs according to under article 327 paragraph 2 of the Italian Code of Civil Procedure.
Nevertheless, the short-term time limit shall run regularly upon “… valid notification of the ruling to the defaulting party …” (see Italian Supreme Court, Section III, 13.11.2018 no. 29037).
REPLACEMENT OF THE ORIGINAL RECIPIENT OF THE GOODS IN THE “CALL-OFF STOCK” REGIME: PUBLICATION OF THE REVENUE AGENCY’S OFFICIAL CLARIFICATIONS.
By ruling no. 574 of 25 November 2022, the Revenue Agency clarified that, in case of ‘call-off stock’ arrangements, the VAT regime arising therefrom shall continue to apply if, within twelve months from the arrival of the goods in the territory of the other Member State, the recipient of goods is replaced by another VAT taxable person, provided that the conditions set forth by the legislation are met and the supplier indicates the replacement in an appropriate register.
According to article 17-bis (5) of Directive 2006/112/EC, the compliance administrative burden – connected with VAT obligations arising in the Member State where the warehouse is located – is eliminated (facilitated) in case of call-off stock (or consignment stock) arrangements provided that the transfer of storage goods occurred between two Member States with the aim of their subsequent supply to a previously identified recipient purchaser.
This facilitation was transposed into national law by Legislative Decree No. 192 of 5 November 2021 into Articles 38-bis and 41-bis into Decree-Law No. 331 of 30 August 1993, which, inter alia, for the purposes of the applicability of the call-off stock VAT regime, require, cumulatively, that:
– the supplier and the customer are VAT taxable persons (subjective requirement);
– the identity of the customer, identified for VAT purposes in the Member State of transfer of goods, is previously identified by the supplier from the beginning of the dispatch/transport (objective condition);
– the supplier has neither established its business nor has a permanent establishment in the Member State to which the goods are dispatched or transported (territorial requirement).
Article 50 (5-bis) of Decree-Law No. 331/1993 also requires, in order to prevent fraud and/or abuse, that the movements of goods made in the context of the call-off stock be: a) recorded by the transferor and the recipient in a special register, and b) indicated separately in the declaration of intra-Community supplies and acquisitions, so called ‘Intrastat’.
In this scenario, by Ruling no. 574/2022, the Revenue Agency examined the VAT regime applicable to the call-off stock in the event that the person originally designated as the recipient of the goods is replaced by a different person.
Based on the current legal framework, the Revenue Agency confirmed the applicability of the facilitated VAT regime, provided that the replacement of the original recipient of the goods to the requirements set forth by national law (see above) meets the following additional conditions:
– the replacement takes place before the goods are removed; and
– the transfer of the goods takes place within 12 months of their arrival in the Member State of destination.
These clarifications by the Revenue Agency follow the previous guidance reported in the Explanatory Notes drafted by the services of the European Commission in December 2019 where, in order to ensure transparency and certainty of the transaction, had noted the need: a) that the replacement of the original recipient with the new VAT taxable person should occur before the latter removes the goods; and b) that there should be no interruption between the termination of the call-off stock agreement concluded with the original recipient and the conclusion of a similar agreement with the new one.
The supplier’s obligations to compile the register regarding movements, as well as the ‘Intrastat’ statements containing the information regarding the recipient purchaser’s replacements remain unaffected.
a.salvatore@macchi-gangemi.com
f.dicesare@macchi-gangemi.com
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