Certain clarifications on directors’ liability in corporations
Liability claims towards directors of corporations for breach of their duty to preserve the integrity of the company’s assets may be filed by company’s creditors only if the company’s assets is insufficient for the satisfaction of their credits.
This principle has been clarified by the Court of Rome with the decision no. 16350 dated August 7, 2018. The Court, which was deciding on the liability of the director of a limited liability company, clarified the nature and conditions for the claim pursuant to article 2394 of the Italian Civil Code.
In the case at hand, the director of a limited liability company ordered a certain number of wine bottles, which were then delivered to the company within the agreed terms. The director paid the supplier through the issuance of a bank check, which however resulted not payable as it had been issued without the relevant bank authorization. The supplier therefore convened the director before the Court for the payment of the purchased goods, claiming also its liability pursuant to article 2394 of the Italian Civil Code.
The Court clarified that the preliminary condition for the directors’ liability towards the company’s creditor pursuant to article 2394 of the Italian Civil Code consists in the breach of their duty to preserve the integrity of the company’s assets, whereby such integrity shall not be considered from a static point of view, but dynamically, with regard to its value. In particular, the Court stated that the company’s assets shall be considered as integral if, irrespectively of the accounting situation, it is convertible into cash and suitable to satisfy the creditors. Thus, the company’s assets shall be considered as a patrimonial guarantee.
In addition, the directors’ liability toward the company’s creditors arises only if the company’s assets are insufficient to satisfy the latter, and whereby such insufficiency is due to the directors. This insufficiency shall be intended as a situation in which the liabilities exceed the assets, thus when the company’s assets are insufficient to satisfy the company’s debts.
The Court also clarified the nature of the direct liability of directors towards shareholders and third parties pursuant to article 2395 of the Italian Civil Code. In particular, it pointed out that, pursuant to the mentioned provision, the damage is caused directly to the shareholder or third party, whereby pursuant to article 2394 of the Italian Civil Code the creditors’ damage is a mere reflex of the damage caused by the director to the company’s assets.
In addition, director’s liability pursuant to article 2395 of the Italian Civil Code constitutes a non-contractual damage that arises when a company is in breach of an obligation, and such breach is caused intentionally or with negligence by the director.
In light of the above mentioned reasoning, in the case at hand the Court (i) rejected the claim pursuant to article 2394 of the Italian Civil Code, stating that the creditor claimed a damage which is direct, and not caused by the breach of the director of its duties to preserve the integrity of the company’s assets; and (ii) rejected also the claim pursuant to article 2395 of the Italian Civil Code, as the claimant did not provide the proof of the intentionality or negligence of the director.