Consequences in Italy of Having an Executive Who Is Both a Manager and a Member of the Board of Directors

Massimiliano Desalvi's picture
Published: 20/12/16 - Country: Italy


Nowadays the commerce develops in an international context and this leads many companies to have a headquarter in other countries. Because of that it is possible that some of our clients may have or may decide to have a branch somewhere else. Furthermore, to contain the costs, the majority of companies usually is represented in that state by only one person, who is equipped with many powers. This creates confusion about the function of that person: in other words it is difficult to understand if this person is a manager or only a member of the board of directors.

This kind of situation is hardly ever consider, but it can create many problems, especially in those countries in which this circumstance represent the particular case of “incompatibility”, as in Italy.

In our state the consequences chiefly are two:

  1. The Italian Social Contribution Authority can consider the attorney only as a member of the board of directors and not as a manager. In this case the payments for social contribution for labour contract can be denied and can be requested other payments for social contribution for directors fees. These two kind of payments are completely different and no one can freely choose one instead of the other.
  2. The Italian Tax Agency can deny the whole cost of the manager because these costs are not deductible.

The Court of Cassation in two judgments established that the two positions can be accumulated if subsist two terms:

  1. Restriction subordination: the employee must be subjected to the power of the board of directors.
  2. Different tasks: the manager can be a member of a board of directors unless there is not an overlapping of jobs.

To avoid the consequences of having an attorney who is both a manager and a member of the board of directors and the directly consequences, the company can choose between these two solutions:

  1. Nominate a board of directors of which the manager is not a member; he can have many powers, but he has to respect the restriction subordination.
  2. Nominate a board of directors of which the manager is a member, with limited mandates and respecting the term of the different tasks.

In conclusion, it is important to solve this incompatibility’s situation to prevent sanctions, more costs or the loss of the retirement benefits for the manager.

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Massimiliano Desalvi's picture

Massimiliano Desalvi, partner of Interconsulting for more than 10 years, provides consulting and he is experienced in litigation in the areas of civil and commercial law, bankruptcy and insurance legislation. 

He coordinates the team of lawyers and young professionals in order to meet and respond to the challenging client’s needs concerning legal matters or disputes.