Capital Markets

The new rules on non-financial information

With the Legislative Decree no. 254 of December 30, 2016 (the “Legislative Decree“), implementing Directive 2014/95/EU, has been introduced in Italy the new regulation on public disclosure of non-financial information, applicable from the financial year commencing on 1st January 2017.

The Legislative Decree is addressed and applicable to public interest entities (as listed and defined under Article 16 of Legislative Decree 39/2010) which have, on an individual or consolidated basis, during the financial year, an average number of employees greater than 500 and which, at the end of the financial year, have exceeded (with respect to individual or consolidated data) at least one of the following limits: (a) total net asset value: euro 20,000,000; and (b) total net income from sales and services: Euro 40,000,000. However, the obligation to draw up and publish the individual non-financial statement does not fall within the scope of the public interest entities which, while exceeding the limits above on an individual basis: (i) are also required to draw up and publish the consolidated statement; and (ii) are included in the non-financial statement prepared by their parent company.

For the sake of clarity, article 16 of Legislative Decree 39/2010, as amended by Legislative Decree 135/2016, defines entities of public interest such as: (a) Italian companies issuing securities admitted to trading on regulated Italian and European markets; (b) banks; (c) insurance companies referred to in article 1, par. 1, letter (u) of the Private Insurance Code; and (d) the reinsurance companies referred to in article 1, par. 1, letter (c) of the Private Insurance Code, with registered office in Italy, and the administrative offices (sedi secondarie) in Italy of non-Community reinsurance companies referred to in article 1, par. 1, letter cc-ter) of the Private Insurance Code.

The discipline introduced by the Legislative Decree provides that the relevant public interest entities shall draw up, for each financial year, a statement aimed at providing the public with a correct information on the business activity, its performance, its results and its impact on energy, environmental, social and employment aspects, as well as on those regarding human rights and anti-corruption both active and passive. The non-financial statement shall describe, inter alia, the principal risks incurred or suffered in connection with the aforementioned aspects, as well as the business model for managing and organizing the business activities and the policies applied and the actions taken to manage such risks. Non-financial information is provided by comparison with those provided in the previous financial years, referring, where appropriate, to the items and amounts contained in the financial statements. In the event that a public interest entity is required to publish a non-financial statement on a consolidated basis, the non-financial statement shall refer to the group as a whole, including the parent company and entirely consolidated subsidiaries.

In cases where public interest entities do not pursue policies with respect to one or more aspect among those listed above, such public interest entities will be required to explain the justification for such choice in a clear and structured manner. In exceptional cases, by means of a justified resolution of the board of directors, having consulted the supervisory body, the non-financial statement may omit information on imminent developments and transactions, if their disclosure could compromise the commercial strategy of the entity. It is understood that if a public interest entity avails itself of such choice, it must state it in the non-financial statement.

From the point of view of the corporate bodies involved in the drafting of the non-financial statement and its approval procedure, the similarities with the regulation concerning financial statements are numerous and the non-financial statement can, in fact, be included in the management report that accompanies the consolidated or non-consolidated financial statements (and, in that case, constitutes a specific section of the same) or can constitute a separate report.

With reference, first of all, to the corporate bodies involved in drafting and approving the non-financial statement, the Legislative Decree entrusts the members of the management body of the public interest entity with the responsibility of drafting the non-financial statement. The board of statutory auditors, on the other hand, is required to monitor the compliance of the non-financial statement with the provisions of the Legislative Decree and to report it in the annual report to the shareholders’ meeting. The person in charge of the legal audit of the financial statements (or other legal auditor specially designated) verifies that the non-financial statement has been prepared and expresses, with a special report different from the one regarding the financial statements, a certificate of compliance of the information provided in respect of the provisions of the Legislative Decree.

As far as concerns, on the other hand, the procedure for the approval of the non-financial statement, the Legislative Decree provides that, within the same time limits set forth with reference to the financial statements, the non-financial statement approved by the managing body must be made available to the board of statutory auditors and to the legal auditor and then deposited in the company’s register by the directors, jointly with the management report.

Upon occurrence of a breach of the provisions under Legislative Decree (i.e. in the case of omitted deposit of the non-financial statement, of non-compliance of the same with the provisions of the Legislative Decree or in the case the same provides untrue information or omits relevant information) penalties are provided on the persons involved in the process of drafting the non-financial statement and, therefore, on directors, members of the board of statutory auditors and on the legal auditors, which vary between Euro 20,000 and Euro 150,000. The public authority responsible for investigating and disposing of such penalties is Consob and the sanctioning procedure referred to in Articles 194-bis, 195, 195-bis and 196-bis of the Consolidated Financial Act applies.



The contents of this article are meant for informative purposes only and cannot be considered as professional advice. For further information please contact


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