Legal Framework


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Legislative Decree no. 39 of 27 January 2010: Implementation of directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts, amending directives 78/660/EEC and 83/349/EEC and repealing directive 84/253/EEC1

CONTENTS

Chapter I  - DEFINITIONS
Article 1 - Definitions

Chapter II - LICENCE TO PRACTICE AND ONGOING TRAINING
Article 2 - Licence to practice as a statutory auditor
Article 3 - Traineeship
Article 4 - Professional competence examination
Article 5 - Ongoing training

Chapter III - REGISTER
Article 6 - Inclusion in the Register
Article 7 - Information contained in the Register
Article 8 - Register Section regarding inactive auditors

Chapter IV - IMPLEMENTATION OF THE STATUTORY AUDIT
Article 9 - Professional ethics, confidentiality and professional secrecy
Article 10 - Independence and objectivity
Article 11 - Auditing standards
Article 12 - Application of the standards
Article 13 - Appointment, revocation and dismissal from auditing appointments, termination of the contract
Article 14 - Auditing reports and opinions on financial statements
Article 15 - Responsibility

Chapter V - SPECIAL PROVISIONS RELATING TO ENTITIES OF PUBLIC INTEREST
Article 16 - Entities of public interest
Article 17 - Independence
Article 18 - Transparency report
Article 19 - Committee for internal control and statutory auditing

Chapter VI - QUALITY CONTROL
Article 20 - Quality control

Chapter VII - SUPERVISION
Article 21 - Duties and powers of the Ministry of the Economy and Finance
Article 22 - Duties and powers of Consob
Article 23 - Co-operation between authorities and professional secrecy

Chapter VIII - ADMINISTRATIVE AND JUDICIAL SANCTIONS
Article 24 - Provisions of the Ministry of the Economy and Finance
Article 25 - Disciplinary procedures
Article 26 - Consob rulings
Article 27 - False reports or communications from those responsible for the statutory audit
Article 28 - Corrupting auditors
Article 29 - Impeding controls
Article 30 - Illegal compensation
Article 31 - Illicit financial relationships with the company subject to auditing
Article 32 - Common provisions

Chapter IX - INTERNATIONAL ASPECTS
Article 33 - International co-operation
Article 34 - Inclusion of Third country auditors in the Register
Article 35 - Supervision of statutory auditors and Third country auditing bodies
Article 36 - Exceptions in the event of equivalence

Chapter X - AMENDING AND REPEALING CURRENT LEGISLATION
Article 37 - Amendments to the Civil Code
Article 38 - Amendments to Legislative Decree 127 of 9 April 1991
Article 39 - Amendments to the Consolidated Law on Banking
Article 40 - Amendments to the Consolidated Law on Financial Intermediation
Article 41 - Amendments to the Private Insurance Companies Code
Article 42 - Staff
Article 43 - Repeals and final and transitional provisions

Chapter I
DEFINITIONS

Article 1
(Definitions)

1. In this Legislative Decree the following definitions apply:

a) «affiliate of a statutory auditing company»: an entity connected with the auditing company through common ownership, common management or a control report;

b) «Private Insurance Code»: Legislative Decree no. 209 of 7 September 2005, containing the Code of Private Insurance Companies;

c) «public interest entities»: the companies identified in accordance with Article 16;

d) «Third country audit entity»: an entity, regardless of its legal status, which is appointed to audit the annual or consolidated accounts of a company incorporated in a Third country;

e) «group»: all the companies included in the consolidation pursuant to Legislative Decree no. 127 of 9 April 1991;

f) «Third country»: a State that is not a member of the European Union;

g) «Register/Register of statutory auditors»: the register in which statutory auditors and auditing companies are entered in accordance with Article 2 section 1;

h) «statutory audit report»: the document containing the opinions on financial statements expressed by the auditor to whom the audit has been assigned and which is signed by the responsible auditor;

i) «responsible auditor»:

1) the statutory auditor who has been charged with the audit;

2) the auditor, in the Register, responsible for carrying out the audit if the audit has been assigned to a statutory auditing company;

l) «network»: the structure to which a statutory auditor belongs or a statutory auditing company, for the purpose of cooperation and which clearly pursues profit or cost sharing or is based on ownership, majority shareholding or common management and shares common quality control practices and procedures, the same business strategy, a common name or a significant part of professional resources;

m) «statutory audit»: statutory audits of annual accounts or consolidated accounts made in accordance with the provisions of this Legislative Decree or, if it is carried out in another EU Member State, the provisions of the implementation of EC Directive 2006/43 in force in that Member State;

n) «statutory auditor»: a natural person authorised to carry out statutory audits in accordance with the Civil Code and the provisions of this Legislative Decree and entered in the Register or a natural person authorised to perform a statutory audit in another EU Member State under the provisions of the implementation of EC Directive 2006/43 in force in that Member State;

o) «Third country auditor»: a natural person who performs the audit of the annual accounts or consolidated accounts of a company with registered offices in a country which is not part of the European Union;

p) «group auditor»: the statutory auditor or statutory auditing company charged with the statutory audit of the consolidated accounts;

q) «statutory auditing company»: a company authorised to carry out statutory audits in accordance with the provisions of this Legislative Decree and entered in the Register or a company authorised to perform statutory audits in another EU Member State under the provisions of the implementation of EC Directive 2006/43 in force in that Member State;

r) «Consolidated Law on Banking»: the consolidated law on banking and credit in accordance with Legislative Decree no. 385 of 1 September 1993;

s) «Consolidated Law on Financial Intermediation»: the consolidated law on financial intermediation procedures in accordance with Legislative Decree no. 58 of 24 February 1998.

Chapter II
LICENCE TO PRACTICE AND ONGOING TRAINING

Article 2
(Licence to practice as a statutory auditor)

1. Statutory auditing can only be carried out by those entered in the Register.

2. The following natural persons are eligible to enter the Register:

a) those who meet the professional conduct requirements drawn up by the Ministry of Economy and Finance having consulted with Consob2;

b) those who have at least a three year degree chosen from those identified in the regulations of the Ministry of Economy and Finance, having consulted Consob3;

c) those who have completed a traineeship in accordance with Article 3;

d) those who have passed the professional competence exam referred to in Article 4.

3. The following are eligible to entry the register:

a) natural persons authorised to perform statutory audits in one of the other Member States of the European Union who have passed an aptitude test, carried out in Italian, focusing on knowledge of the relevant Italian legislation in accordance with the procedures set out in the regulations of the Ministry of the Economy and Finance, having consulted Consob4;

b) on condition that reciprocity of terms is guaranteed for Italian statutory auditors, Third country auditors who fulfil the conditions specified in section 2 who, if appropriate, have taken part in such States in refresher courses and passed an aptitude test carried out in Italian, focusing on knowledge of the relevant Italian legislation in accordance with the procedures set out in the regulations of the Ministry of the Economy and Finance, having consulted Consob5.

4. Companies which meet the following conditions are eligible to enter the Register:

a) the members of the Board of Directors or the administrative board who meet the professional conduct requirements drawn up by the Ministry of Economy and Finance having consulted with Consob6;

b) the majority of the members of the Board of Directors or the administrative board are natural persons authorised to perform statutory audits in one of the Member States of the European Union;

c) in the companies regulated by Chapters II, III and IV of Title V of Book V of the Civil Code, both numerical and shareholder majorities are made up of entities authorised to perform statutory audits in one of the Member States of the European Union;

d) in the companies regulated by Chapters V and VI of Title V of Book V of the Civil Code, registered non transferable shares by endorsement;

e) in the companies regulated by Chapters V, VI and VII of Title V of Book V of the Civil Code, the majorities are made up of entities authorised to perform statutory audits in one of the Member States of the European Union;

f) those responsible for statutory audits are natural persons in the Register.

5. For simple partnerships the advertising methods set out in Article 2296 of the Civil Code shall be respected.

6. Entry in the Register confers the right to use the title of statutory auditor.

7. The Ministry of Economy and Finance, having consulted Consob, has drawn up the regulations defining the criteria for the assessment of the equivalence of the requirements referred to in section 3 paragraph b), and has identified the Third countries guaranteeing such equivalence>7.

Article 3
(Traineeship)

1. The traineeship:

a) is aimed at the acquisition of the ability to apply in practice the theoretical knowledge required to pass the professional competence examination and to perform the statutory auditing profession;

b) lasts at least three years;

c) is carried out with a statutory auditor or a statutory auditing company with authorisation in one of the Member States of the European Union which can guarantee the trainee's practical training.

2. For each trainee registered, the traineeship Register shall contain:

a) the complete details of the trainee and the address given by the latter as a postal address for all communication regarding the traineeship procedures;

b) the start date of the traineeship;

c) the location of the traineeship;;

d) traineeship transfers, interruptions and any other amendments regarding the carrying out of the traineeship.

3. The information referred to in section 2 shall be held in electronic form and shall be freely accessible on the website of the person in charge of keeping the traineeship Register in accordance with Article 21.

4. Within sixty days of the conclusion of each year of traineeship, the trainee shall draw up a report on his/her activities specifying the actions and duties relating to statutory auditing activities he/she has taken part in preparing and carrying out with details of the object of the activities and the technical and practical duties which he/she has carried out or assisted with. The report shall be signed by the entity in which the traineeship has been held and forwarded to the person in charge of keeping the traineeship register.

5. Trainees intending to complete their traineeship period with another statutory auditor or statutory auditing company shall give written notice to the person in charge of keeping the traineeship register attaching the traineeship termination and start date certification issued by the entity in which the traineeship has been carried out and that where it will continue respectively. The report referred to in section 4 shall be drawn up and forwarded to the person in charge of keeping the traineeship register including on each transfer of the traineeship.

6. A traineeship period carried out with a different party from that previously indicated is only eligible for the purposes of professional qualification if advance written notice has been given in accordance with section 5.

7. Traineeship periods carried out wholly or partially with an authorised statutory auditor or statutory auditing company in another Member State of the European Union are eligible for the purposes of professional qualification upon certification that it was effectively carried out by the competent authorities in the State in question.

8. The Ministry of Economy and Finance, in concert with the Ministry of Justice, having consulted Consob, shall regulate the implementation procedures of this Article, with definitions which include:

a) the contents and presentation procedures for application for entry in the traineeship registers;

b) the procedures for carrying out the traineeship in accordance with section 1, paragraph a);

c) the reasons for termination and suspension of the trainee from the traineeship register;

d) the procedures for issuing a traineeship certification;

e) the disclosure obligations of those entered in the traineeship register and the entities at which the traineeship was carried out8.

Article 4
Professional competence examination

1. The Ministry of Economy and Finance, in agreement with the Ministry of Justice, shall announce at least twice a year professional competence examinations for licences to practice the profession of statutory auditor.

2. The professional competence examination aims to ascertain whether the candidate possesses the theoretical knowledge required to practice the profession of statutory auditor and the practical ability to apply this knowledge and concentrates on the following subjects in particular:

a) general accounting;

b) cost and management accounting;

c) compliance with financial statements and consolidated financial statements;

d) national and international accounting standards;

e) financial analysis;

f) risk management and internal auditing;

g) national and international auditing principles;

h) compliance with statutory auditing;

i) professional ethics and independence;

l) professional auditing techniques;

m) civil and commercial law;

n) company law;

o) bankruptcy law;

p) tax law;

q) employment and social security law;

r) information technology and operating systems;

s) political, corporate and financial economics;

t) fundamental principals of financial management;

u) mathematics and statistics.

3. For the subjects referred to in section 2, paragraph m) to u), the assessment of the theoretical knowledge and the ability to apply them in practice is limited to what is necessary to perform the audit.

4. The Ministry of Justice, in concert with the Ministry of Economy and Finance, having consulted Consob, regulates the implementation procedures of this Article, with definitions which include:

a) the contents and presentation procedures for application for entry to the professional exam;

b) procedures for the appointment of the examination board and the obligations to which it is bound;

c) the contents and means to sit the professional exam;

d) cases of equivalence with State examinations for certification to exercise regulated professions and any additions required.

5. With the regulation referred to in section 4, the Ministry of Justice can complement and specify the subjects referred to in section 2 and make provisions for the implementation measures adopted by the European Commission in accordance with Article 8, paragraph 3, of EC Directive 2006/43.

Article 5
(Ongoing training)

1. Those entered in the Register and the traineeship register shall take part in refresher courses aimed at the improvement and maintenance of their theoretical knowledge and professional capacity in accordance with the procedures established by regulation by the Ministry of Economy and Finance, after consulting Consob.

2. The regulation referred to in section 1 defines the procedures with which ongoing training can be carried out with companies or entities equipped with adequate organisational structures and according to programmes accredited by the Ministry of Economy and Finance, after consulting Consob.

Chapter III
REGISTER

Article 6
(Inclusion in the Register)

1. The Ministry of Economy and Finance, in concert with the Ministry of Justice, after consulting Consob, with its own regulations, shall establish:

a) the content and method of presentation of applications for entry in the Register of statutory auditors and auditing companies;

b) procedures and terms within which registration applications will be considered and for the assessment of the requisites9.

2. Candidates failing to meet the requirements for qualification according to the criteria of the Ministry of Economy and Finance shall be informed of this decision and shall have a period not exceeding six months to remedy their shortcomings. If, within the time limit given, the candidate has not done so, the Ministry of Economy and Finance, after hearing the interested party, shall provide by decree for cancellation from the Register.

3. The candidate shall be informed of the cancellation provision and the reasons for it.

Article 7
(Information contained in the Register)

1. For each statutory auditor, the Register contains at least the following information:

a) first name, surname, place and date of birth;

b) registration number;

c) residency, even if abroad, and domicile in Italy, and, if different, the tax domicile;

d) tax code identifier and VAT number;

e) the name, registration number, address and website, of any statutory auditing company with which the auditor is employed, or of which he is a partner or director;

f) any other membership that the auditor has in registers of statutory auditors or auditors in other EU Member States or other States, with an indication of any registration numbers and the competent authorities which keep the registers;

g) any auditing posts held at public interest entities;

h) any rulings in force, in accordance with Articles 24, section 1, paragraphs b) and d), and 26, section 1, paragraphs c) and d).

2. For each auditing firm, the Register shall contain at least the following information:

a) name or business name;

b) registration number;

c) the address of the head offices and all offices;

d) contact information for the company and the name of the contact person, as well as any Internet site;

e) name, surname and registration number of statutory auditors employed by the company or who are members or directors, with an indication of any rulings in force in accordance with Articles 24, section 1, paragraphs b) and d), and 26, section 1, paragraphs c) and d);

f) name, surname and domicile in Italy of members of the Board of Directors or the Management Board, together with an indication of any registration they have in registers of statutory auditors or auditors in other EU Member States or other States, and specifying any registration numbers and the competent authorities for the keeping of registers;

g) the company's VAT number;

h) name, surname and domicile of partners, together with an indication of any registration they have in registers of statutory auditors or auditors in other EU Member States or other States, and specifying any registration numbers and the competent authorities for the keeping of registers;

i) the name of any network to which the company belongs with an indication of the names and addresses of all other companies belonging to the network and its affiliates or, alternatively, the place where such information is publicly available;

l) any other membership that the company has in registers of statutory auditors or auditors in other EU Member States or other States, with an indication of any registration numbers and the competent authorities for the keeping of the registers;

m) any auditing posts held at public interest entities;

n) any rulings in force, in accordance with Articles 24, section 1, paragraph d), and 26, section 1, paragraphs d).

3. The auditors and Third country auditing entities included in the Register, in accordance with Article 34, shall be clearly indicated as such and not as qualified entities to carry out statutory audits in Italy.

4. The Register shall contain the name and address of the Ministry of Economy and Finance and of Consob, with an indication of their respective powers of supervision over statutory auditing activities.

5. The information referred to in section 2 shall be held in electronic form and shall be freely accessible on the website of the person in charge of keeping the register in accordance with Article 21.

6. The entities entered in the Register shall communicate promptly to the entity in charge of the Register any change in the information related to them. The entity in charge of the Register is responsible for updating the Register.

7. The Ministry of Economy and Finance, after consulting Consob, according to its own rules, shall regulate the implementation of this Article, defining in particular the content, procedures and terms of information transmission and their updating by those entered in the Register10.

Article 8
(Register Section regarding inactive auditors)

1. The entities entered in the Register shall notify the person in charge of keeping the Register of statutory audit appointments undertaken. The statutory auditing company shall also, for each appointment, communicate the names of the responsible auditor and statutory auditors who have contributed to carrying it out.

2. Those entities who have not undertaken statutory audits or have not worked on statutory auditing activities in a statutory auditing company for three consecutive years and those who request it are registered in a special section of the Register and, unless they have voluntarily taken part in the professional refresher courses referred to in Article 5, section 1, can take on new statutory audit appointments only after participation in a training and refresher course, according to the procedures defined by the Ministry of Economy and Finance in concert with the Ministry of Justice, after consulting Consob, with regulations.

3. Those registered in the appropriate section of the Register according to section 2 shall not be required to comply with the obligations in the matter of ongoing training referred to in Article 5 and shall not be subject to the quality control reviews referred to in Article 20, or to the payment of contributions to cover the costs of the latter.

Chapter IV
IMPLEMENTATION OF THE STATUTORY AUDIT

Article 9
(Professional ethics, confidentiality and professional secrecy)

1. Entities authorised to carry out statutory audits of the accounts shall comply with the principles of professional ethics, confidentiality and professional secrecy drawn up by associations and professional bodies and approved by the Ministry of Economy and Finance, in concert with the Ministry of Justice, after consulting Consob, which are issued by the Ministry of Economy and Finance, in concert with the Ministry of Justice, after consulting Consob.

2. The statutory auditor or statutory auditing company shall consult the entity previously in charge of the audit, in order to obtain any information relevant to the performance of the audit relative to the company which conferred the audit. The entity previously in charge of the audit shall give access to this information.

3. The Ministry of Economy and Finance, in concert with the Ministry of Justice, after consulting Consob, shall make provisions for the implementation measures adopted by the European Commission in accordance with Article 21, section 2 of EC Directive 2006/43.

Article 10
(Independence and objectivity)

1. The statutory auditor and statutory auditing company carrying out the statutory audit of the accounts of a company must be independent of the company and must not in any way whatsoever be involved in its decision making processes.

2. The statutory auditor and statutory auditing company shall not carry out the statutory audit of the accounts of a company if between that company and the statutory auditor or statutory auditing company or network, there exist financial, business, employment or other direct or indirect relations, including those arising from the provision of non-auditing services from which an informed, objective and reasonable third party would conclude that the independence of the statutory auditor or statutory auditing company is compromised.

3. If the independence of the statutory auditor or statutory auditing company is likely to be compromised, as in cases of self-review, personal interest, advocacy, familiarity or trust or intimidation, the statutory auditor or statutory auditing company must take measures to reduce these risks.

4. If the risks are of such importance as to compromise the independence of the statutory auditor or statutory auditing company these shall not carry out the statutory audit.

5. Entities authorized to carry out the statutory audit shall equip themselves with procedures to prevent and promptly detect situations that may compromise their independence.

6. The establishment and operation of such procedures shall be documented so that they can be subjected to quality control reviews.

7. The statutory auditor or statutory auditing company shall document in its working papers all significant threats to its independence and the safeguards applied to mitigate such risks.

8. Partners and Members of the Board of the statutory auditing company or an affiliate shall not become involved in carrying out the statutory audit in a way that could compromise the independence and objectivity of the responsible auditor.

9. Fees for statutory audit appointments shall not be subject to any condition, shall not be established on the basis of the results of the audit, and shall not depend in any way on the provision of non-auditing services to the company that confers the appointment, its parent companies or subsidiaries, by the statutory auditor or statutory auditing company or their networks.

10. Fees for statutory audit appointments shall be determined so as to ensure the quality and reliability of the work. To this end, entities responsible for carrying out statutory audits determine the professional resources and hours necessary for this role taking into account:

a) the size, composition and risk of the most significant income, economic and financial statements of the company conferring the appointment, as well as the risk profiles associated with the process of consolidation of data related to the companies in the group;

b) the technical skills and experience that the audit work requires;

c) the need to ensure, over and above the actual execution of inspections, proper supervision and guidance, in accordance with the principles set out in Article 11.

11. The size of the remuneration of the employees of the statutory auditing companies involved in carrying out statutory auditing activities shall not be determined in any way whatsoever by the outcome of the audits carried out by them.

12. Entities authorised to carry out statutory audits of the accounts shall comply with the principles of independence and objectivity drawn up by associations and professional bodies and approved by the Ministry of Economy and Finance, after consulting Consob, or issued by the Ministry of Economy and Finance, after consulting Consob.

13. The Ministry of Economy and Finance, after consulting Consob, shall make provisions for the extension of the network and the implementation measures adopted by the European Commission in accordance with Article 22, section 4 of EC Directive 2006/43.

Article 11
(Auditing standards)

1. The statutory audit is carried out in accordance with the auditing standards adopted by the European Commission in Article 26, sections 1 and 2 of EC Directive 2006/43.

2. The Ministry of Economy and Finance, in concert with the Ministry of Justice, after consulting Consob, the Bank of Italy with regard to the entities referred to in Article 16, section 1, paragraph b) and ISVAP for the entities referred to in Article 16, section 1, paragraphs c) and d), may issue a regulation to require compliance with audit procedures or additional obligations or, in exceptional cases, the prohibition to observe a part of the standards referred to in paragraph 1, only if the obligation or prohibition results from laws specifically relating to the scope of the statutory audit.

3. Until the standards referred to in section 1 are adopted, the statutory audit shall be carried out in accordance with the auditing standards developed by trade associations and professional orders and Consob.

Article 12
(Preparation of the standards)

1. For the purposes of the implementation of Article 9, section 1, 10, section 12, and 11, section 3, the Ministry of Economy and Finance shall sign an agreement with interested orders and professional associations in order to define procedures for drawing up standards.

2. The standards drawn up by the orders and professional associations signing the convention referred to in paragraph 1 shall take account of those issued by international bodies.

Article 13
(Appointment, revocation and dismissal from appointments, termination of the contract)

1. Except as provided in Article 2328, second section, number 11) of the Civil Code, the shareholders' meeting, on a reasoned proposal of the supervisory body, is made responsible for the statutory audit and determines the amount payable to the statutory auditor or the statutory auditing company for the entire duration of the appointment and any criteria for the adjustment of this amount during the appointment.

2. The appointment has a term of three years and expires at the shareholders' meeting called to approve the financial statements for the third year of office.

3. The shareholders' meeting shall revoke the appointment, after hearing the supervisory body, on recourse to just cause, providing at the same time to confer the appointment to another statutory auditor or statutory auditing company according to the procedures referred to in section 1. Differing views on accounting methods or audit procedures does not constitute just cause for revocation.

4. The statutory auditor or statutory auditing company responsible for an audit may resign from office but they are liable for any compensation in the cases and in accordance with the procedures defined by regulation by the Ministry of Economy and Finance, after consulting Consob. In any event, the resignation must be carried out in such time and manner as to enable the company being audited to provide otherwise, except in the case of gross impediment with supporting evidence from the auditor or statutory auditing company. This same regulation defines the cases and procedures in which the contract conferring the auditing appointment can be resolved by consensus, or for just cause.

5. In the cases referred to in section 4 the company subject to statutory audit shall promptly confer a new appointment.

6. In the event of resignation or consensual termination of a contract, the statutory auditing functions shall continue to be performed by the same statutory auditor or statutory auditing company until a decision on a new appointment has come into effect and, in any case, not later than six months from the date of resignation or termination of the contract.

7. The company being audited and the statutory auditor or statutory auditing company shall promptly inform the Ministry of Economy and Finance, and in the case of statutory audits relating to public interest entities, Consob, as regards revocation, resignation or consensual termination of the contract, providing adequate explanations on the reasons behind them.

8. Deliberations on appointment and revocation adopted by shareholders' meetings in companies limited by share Article 2459 of the Civil Code is applicable.

Article 14
(Auditing reports and opinions on financial statements)

1. The statutory auditor or statutory auditing company responsible for carrying out the statutory audit:

a) express in a specific report an opinion on the financial statements and the consolidated financial statements, where applicable;

b) verify over the year the accounting records and the correct reporting of accounting entries.

2. The report, prepared in accordance with the standards set out in Article 11, shall include:

a) an introductory paragraph that identifies the annual or consolidated accounts subject to statutory audit and the framework of the drafting rules applied by the company;

b) a description of the scope of the statutory audit carried out together with indications on the auditing standards applied;

c) an opinion on the financial statement which indicates clearly whether this complies with the laws regulating its drawing up and whether it represents a true and fair view of the financial and equity position and profit or loss situation;

d) any matters which the auditor submits to the attention of the recipients of the financial statement, without these constituting irregularities;

e) an opinion on the consistency of the management report with the financial statement.

3. In the event that the auditor expresses an opinion that the financial statement includes irregularities, an adverse opinion or a disclaimer to the effect that it was impossible to express an opinion, the report shall illustrate analytically the reasons for the decision.

4. The report shall be dated and signed by the responsible auditor.

5. The filing terms and procedures referred to in Article 2429, third section, and Article 2435, first section of the Civil Code, except as provided in Article 154-ter of the Consolidated Law of Financial Intermediation shall be respected.

6. The entities to whom the statutory audit has been assigned have the right to obtain from the directors documents and relevant information for the statutory audit and may carry out investigations, inspections and examinations of records and documentation. The statutory auditor or statutory auditing company responsible for auditing the consolidated financial statements is entirely responsible for the opinions expressed by it. To this end, they receive the audit documents by those responsible for the audit of its subsidiaries and may require such persons or the directors of such subsidiaries additional documentation and relevant information for the audit and proceed directly to investigations, inspections and examinations of records and documentation and to an audit of the same company. The documents and working papers relating to the statutory audit carried out shall be retained for 10 years from the date of the audit report.

7. The statutory auditor or statutory auditing company responsible for auditing the consolidated financial statements must keep a copy of the documents and working papers relating to the audit work carried out by the auditors and by third country auditing entities or, alternatively, must agree access to such documentation with these entities. The presence of legal obstacles to the transmission of such documents must be proven in the working papers of the statutory auditor or statutory auditing company responsible for auditing the consolidated financial statements.

Article 15
(Responsibility)

1. The statutory auditors and auditing companies are jointly and severally liable with each other and with the directors to the company that has assigned the audit, its partners and third parties for damages deriving from the non-fulfilment of their duties. In internal relations between the joint debtors, they are responsible within the limits of their actual contribution to the damage caused.

2. The responsible auditor and the employees who have worked on the auditing activities are responsible, jointly and severally, and with the statutory auditing company, for damages resulting from non fulfilment or unlawful acts against the company which assigned the audit and against injured third parties. They are responsible within the limits of their actual contribution to the damage caused.

3. Claims for damages against those responsible in accordance with this Article shall expire within a period of five years from the date of the audit report on the financial statements or consolidated financial statements issued at the end of the audit referred to in the claim for damages.

Chapter V
SPECIAL PROVISIONS RELATING TO ENTITIES OF PUBLIC INTEREST

Article 16
(Entities of public interest)

1. The provisions of this chapter shall apply to entities of public interest and to the statutory auditors and auditing companies responsible for statutory audits of entities of public interest. The following are entities of public interest:

a) Italian companies issuing securities authorised to trade on Italian and European Union regulated markets and those who have requested such authorisation to trade;

b) banks;

c) the insurance companies referred to in Article 1, section 1, paragraph u) of the Private Insurance Companies Code;

d) the reinsurance companies referred to in Article 1, section 1, paragraph cc) of the Private Insurance Companies Code, with registered offices in Italy, and branch offices in Italy and reinsurance companies outside the European Community referred to in Article 1, section 1, paragraph cc-ter) of the Private Insurance Companies Code;

e) companies issuing financial instruments, which, although not listed on regulated markets, are widely distributed among the public in a significant way;

f) management companies of regulated markets;

g) companies that manage clearing and guarantee systems;

h) centralised financial instrument management companies;

i) securities trading companies;

l) asset management companies;

m) investment companies with variable capital;

n) payment institutions under EC Directive 2009/64;

o) electronic money institutions;

p) the financial intermediaries referred to in Article 107 of the Consolidated Law on Banking.

2. In public interest entities, the subsidiaries of public-interest entities, companies that control public-interest entities and companies subject to joint control with the latter, statutory audits can not be carried out by the Board of Statutory Auditors.

3. Consob, in agreement with the Bank of Italy and ISVAP, may identify by regulation the subsidiaries and companies under joint control referred to in section 2 which are not of significant importance within the group, in which, in accordance with Article 2409-bis, second section of the Civil Code, the statutory audit can be carried out by the Board of Statutory Auditors.

4. In the context of the company referred to in section 2, Consob, in agreement with the Bank of Italy and ISVAP, may identify by regulation the companies that, in relation to the extent of public interest in the accuracy and reliability of the financial statements, are considered public-interest entities for the purposes of the implementation of the provisions of this Legislative Decree

5. By regulation, Consob, in agreement with the Bank of Italy and ISVAP, may:

a) exempt, in whole or in part the companies referred to in section 1, except those referred to in the same section paragraph, and the companies considered public interest entities in accordance with section 4 from compliance with one or more provisions of this Legislative Decree relating to public interest entities;

b) and exempt in whole or in part those entered in the register who hold statutory audit appointments at public interest entities and do not hold appointments at the companies referred to in section 1, paragraph a) , from compliance with one or more provisions of Articles 17, 18 and 19 and extend to six years, for the same entities, the term referred to in Article 20, section 2.

Article 17
(Independence)

1. The statutory audit assignment has a duration of nine years for auditing companies and seven years for statutory auditors. It may not be renewed or re-conferred until at least three years have elapsed from the date of termination of the previous assignment.

2. Without prejudice to the provisions of Article 10, and in accordance with the principles laid down in EC Directive 2006/43, Consob shall establish by regulation the situations that may compromise the independence of the statutory auditor, the auditing companies and the responsible auditor of a public-interest entity, and the measures to be taken to remove such situations.

3. The statutory auditors, the statutory auditing company and entities belonging to their network, their members, their directors, the members of their supervisory bodies and employees of the auditing companies can not provide any of the following services to public interest entities which have assigned them audits or to the companies controlled by the same or that control it or are under joint control:

a) bookkeeping and other services related to the accounting records or annual reports;

b) design and implementation of accounting information systems;

c) evaluation and assessment services and issuing independent opinions;

d) actuarial services;

e) external management of internal audit services;

f) consulting and services relating to business organization aimed at staff selection, training and management;

g) securities brokerage, investment consulting or investment banking services;

h) legal defence services;

i) other services and activities, including consulting not excepting legal consulting, unrelated to the audit, identified by Consob in the regulation adopted in accordance with section 2.

4. Appointment as responsible auditor of the financial statements of an public interest entity can not be carried out by the same person for a period exceeding seven financial years, nor can this person be re-appointed, even on behalf of a different statutory auditing company, until two years have elapsed after the termination of the previous appointment.

5. The statutory auditor, the responsible auditor on behalf of an auditing company, and those who have taken part in the management and supervision of the audit of the financial statements of a public interest entity may not hold corporate positions in the direction and supervisory bodies of the entity that appointed the auditor, nor can they take independent or subordinate employment relationships with the entity carrying out important managerial roles until at least two years have elapsed from the conclusion of the appointment, or from the moment they ceased to be members, directors or employees of the auditing company.

6. All those who have been directors, members of the supervisory bodies, general managers or managers responsible for preparing corporate accounting documents at an institution of public interest can not carry out statutory audits of the financial statements of the entity or of the companies controlled by the same or that control it until at least two years have elapsed from the termination of those appointments or employment relationships.

7. Violations of the prohibitions referred to in this Article shall be punishable with administrative sanctions ranging from one hundred thousand to five hundred thousand euro imposed by Consob in accordance with the disciplinary procedures set out in Article 195 of the Consolidated Law of Financial Intermediation.

8. The prohibition in Article 2372, fifth section of the Civil Code also applies to statutory auditors or auditing companies who have been appointed auditor and responsible auditor.

9. Statutory auditors and statutory auditing companies shall:

a) annually confirm in writing to the entity referred to in Article 19, section 1, their independence and notify the same of any non-audit services provided to the public interest entity, including the network of which they are members;

b) discuss with the entity referred to in Article 19, section 1, any risks to their independence and the safeguards applied to mitigate those risks as documented in the working papers in accordance with Article 10, section 7.

Article 18
(Transparency report)

1. Statutory auditors and auditing companies shall publish on their websites within three months of the end of each financial year, an annual transparency report containing the following information:

a) a description of their legal form and ownership and supervisory structure;

b) a description of any network they are members of and the legal and structural arrangements that regulate it;

c) a description of the internal quality control review system and a statement by the administrative or management body with regard to their effective functioning;

d) the date on which the last quality control review took place;

e) a list of public interest entities whose financial statements have been subject to statutory audits in the preceding financial year;

f) a statement on the adoption of measures to guarantee the independence of the statutory auditor or statutory auditing company confirming that an internal compliance with independence standards inspections has been carried out;

g) a statement on the adoption of appropriate measures to ensure ongoing training;

h) financial information relating to the operational scope of the statutory auditor or statutory auditing company, indicating at least the total turnover subdivided into fees for the statutory audit, other audit services, tax advisory services and other non-audit services;

i) information on the basis for calculating the remuneration of the partners.

2. Special dispensations from the obligations referred to in section 1, paragraph e) can be granted in exceptional circumstances involving a serious and imminent threat to personal safety.

3. The transparency report shall be signed by the statutory auditor or by a legal representative of the statutory auditing company. Signatures can also be placed in an electronic format.

4. Consob may request the persons referred to in section 1 to make amendments and additions to the transparency report in the manner and within the time limits established by it.

Article 19
(Committee for internal auditing and statutory auditing)

1. In public interest entities, the Committee for Internal Auditing and Statutory Auditing supervises:

a) the financial reporting process;

b) the effectiveness of internal quality control reviews, internal auditing where applicable, and risk management systems;

c) the statutory audit of annual accounts and consolidated accounts;

d) the independence of the statutory auditor or statutory auditing company, in particular with regard to the provision of non-audit services to the entity subject to statutory audits.

2. The Committee for Internal Control and Audit identifies with:

a) the Board of Statutory Auditors;

b) the supervisory board in entities adopting the system of dual corporate governance, provided that it is not assigned the functions referred to in Article 2409-terdecies, first subjection, paragraph f-bis) of the Civil Code, or a committee set up within it. In this case, the committee shall be consulted by the supervisory board on the subject of the proposal referred to in Article 13 section 1. At least one member of the same committee must be chosen from those entered in the Register;

c) the management control committee in entities adopting the one tier management model.

3. The statutory auditor or statutory auditing company shall submit to the internal quality control reviews committee a report on the key matters arising from the statutory audit, and in particular on the significant weaknesses identified in the internal quality control reviews system in relation to the financial reporting process.

Chapter VI
QUALITY CONTROL

Article 20
(Quality control)

1. Those entered in the register who do not carry out statutory audits of public interest entities are subject to a quality control review at least every six years.

2. Those entered in the register who carry out statutory audits of public interest entities are subject to a quality control review at least every three years.

3. Quality control reviews are carried out by individuals possessing adequate training and professional experience with regard to auditing and financial and budget reporting, as well as specific training on quality control reviews.

4. The selection of individuals to be assigned to each quality control review shall take place according to an objective procedure designed to exclude any conflict of interest between the persons in charge of the control and the statutory auditor or statutory auditing company subject to review.

5. Based on a review of selected auditing papers, quality control reviews include an assessment of compliance with auditing standards and independence requirements, of the quantity and quality of resources used, of the audit fees, and the internal quality control reviews in the statutory auditing company.

6. The persons in charge of the quality control review draft a report containing a description of the results of the review and any recommendations for specific action to be taken to the statutory auditor or statutory auditing company indicating the period within which such action must be undertaken.

7. The statutory auditor or statutory auditing company shall carry out the action indicated in the report in accordance with section 6 within the period set out in it. In case of failure, incomplete or late implementation of these actions, the Ministry of Economy and Finance and Consob under the scope of their respective competencies, may apply the sanctions provided for in Articles 24 and 26.

8. With reference to the quality control review on the subjects referred to in section 1, the Ministry of Economy and Finance, after consulting Consob, shall make provision for the implementation of this Article, specifying in particular the criteria for carrying out the quality control review, for the selection of persons responsible for carrying out the review and for the drafting of the report referred to in section 6.

9. With reference to the quality control on the subjects referred to in section 2, Consob makes provision for the implementation of this Article, specifying in particular the criteria for carrying out the quality control, for the selection of the natural persons responsible for carrying out the controls and for the drafting of the report referred to in section 6.

10. The Ministry of Economy and Finance, after consulting Consob, shall make provisions for the implementation measures adopted by the European Commission in accordance with Article 29, section 2 of EC Directive 2006/43.

Chapter VII
SUPERVISION

Article 21
(Ministry of the Economy and Finance duties and powers)

1. The Ministry of Economy and Finance shall carry out quality control reviews on statutory auditors and auditing companies that have no statutory audit assignments on public interest entities, as well as regarding:

a) the qualification process, including the conduct of the traineeship, and the entry in the Register of statutory auditors and auditing companies;

b) keeping the Register and the traineeship Register;

c) ongoing training;

d) compliance with the provisions of this Legislative Decree by the statutory auditors and auditing companies who do not have statutory audit appointments with public interest entities.

2. The Ministry of Economy and Finance may, on a contractual basis, use public or private entities for the performance of duties, including investigations and assessment regarding qualification of statutory auditors and auditing companies, keeping the Register and the traineeship register, conducting ongoing training and quality control reviews.

3. The entities referred to in section 2 shall carry out their duties in accordance with the provisions of this Legislative Decree, its implementation regulations, and an agreement drawn up with the Ministry of Economy and Finance.

4. The entities referred to in section 2 shall have in place procedures to prevent, detect and manage conflicts of interest or other circumstances which, in the performance of delegated tasks, may compromise their independence in relation to those entered in the Register or the traineeship register.

5. The Ministry of Economy and Finance shall supervise the proper and independent performance of tasks delegated by the entities referred to in section 2, may recommendation action to them and may at any time withdraw without charges from the agreements referred to in section 3, arrogating the delegated tasks.

6. In the exercise of supervision referred to in sections 1 and 5, the Ministry of Economy and Finance may:

a) require communication, including regular data and information and the transmission of records and documents, in the manner and within the time limits set out by it;

b) perform inspections and obtain information and clarification, including by hearing, by the statutory auditors and by the partners, directors, members of the supervisory bodies and managers of the auditing companies;

c) request information, data or documents in any form whatsoever, setting the deadline for its communication, and conduct personal hearings in relation to anyone who may be in possession of the facts.

7. The performance of the functions assigned to the Ministry of Economy and Finance and the Ministry of Justice by this decree shall be financed by the contributions of those entered in the Register. Those entered in the Register are required to pay contributions by 31 January of each year. In the event of non-payment or delayed payment of contributions, the Ministry of Economy and Finance may adopt the measures referred to in Article 24.

8. The Ministry of Economy and Finance, in concert with the Minister of Justice, shall establish by decree the amount of the contribution, commensurate with the absolute costs of the services provided and the allocation of costs between the two ministries. For functions whose cost varies according to the complexity of the activities carried out by those entered in the Register, contributions are proportional to the amount of revenues and fees taken by the participants and in a manner that ensures the complete coverage of the service costs.

9. By April 30 of each year, the Ministry of Economy and Finance shall publish a report of its activities on its website. The report includes the overall results of the quality control review.

Article 22
(Consob duties and powers)

1. Consob shall supervise the organization and activity of the statutory auditors and auditing companies who have statutory audit appointments with public interest entities in order to monitor their independence and technical competence. In carrying out this activity, Consob shall carry out the quality control reviews referred to in Article 20.

2. Entities performing statutory audits of public interest entities shall observe the standards of the internal quality control reviews developed by associations and professional bodies and approved by Consob or issued by Consob.

3. In the exercise of supervision, Consob may:

a) require communication, including regular data and information and the transmission of records and documents, in the manner and within the time limits set out by it;

b) perform inspections and obtain information and clarification, including by hearing, from the statutory auditors and by the partners, by the members of the administrative and auditing bodies and managers of the auditing companies;

c) request information, data or documents in any form whatsoever, setting the deadline for its communication, and conduct personal hearings in relation to anyone who may be in possession of the facts.

4. Consob may delegate tasks related to the implementation of quality control reviews to another entity, keeping the following responsibilities:

a) approval and possible amendment of the methods and programmes of quality control reviews;

b) approval and possible amendment of the reports referred to in Article 20, section 6;

c) the approval or designation of those responsible for quality control reviews;

d) issuing of recommendations and instructions in any form whatsoever to the entity to which the tasks have been delegated.

5. The entities referred to in section 4 shall carry out their duties in accordance with the provisions of this Legislative Decree, its implementation regulations, and an agreement drawn up with Consob.

6. The entities referred to in section 4 shall have in place procedures to prevent, detect and manage conflicts of interest or other circumstances which, in the performance of delegated tasks, may compromise their independence in relation to those entered in the Register or the traineeship register.

7. Consob shall supervise the proper and independent performance of tasks delegated by the entity referred to in section 4, may address recommendations to it, may at any time revoke the delegation and withdraw without charges from the agreement, arrogating the delegated tasks.

8. Consob may participate in the inspections carried out by the entity referred to in section 3 and shall have access to any relevant documents.

9. The report referred to in Article 20, section 6, shall be communicated to the statutory auditors and auditing companies and discussed with these parties before it is finalised.

10. Statutory auditors who have audit appointments and entities which have direct or indirect, relationships, of employment, consulting, partnership or other professional relationship, including those who have taken corporate positions with a statutory auditor or a statutory auditing company can not be in charge of quality control reviews on the entities referred to in section 1.

11. An entity can not be responsible for quality control reviews of one of the entities referred to in section 1 until at least two years have elapsed from the termination of any relationship, direct or indirect, of employment, consulting, partnership or other professional relationship, including those who have taken corporate positions with a statutory auditor or a statutory auditing company.

12. The overall quality control reviews results are shown by Consob in the report referred to in Article 1, the thirteenth section of Legislative Decree no. 95 of 8 April 1974 converted with amendments, by Law no. 216 of 7 June 1974 and published on its website.

Article 23
(Cooperation between authorities and professional secrecy)

1. The Ministry of Economy and Finance and Consob work together, including through exchange of information, in order to facilitate their respective functions, identifying forms of coordination through memoranda of understanding or the establishment of steering committees. These authorities can not make recourse to professional secrecy in the exercise of these functions solely.

Chapter VIII
ADMINISTRATIVE AND JUDICIAL SANCTIONS

Article 24
(Provisions of the Ministry of the Economy and Finance)

1. The Ministry of Economy and Finance, when it finds irregularities in carrying out the statutory audit and in the event of delay or failure to provide information under Article 7, may, having regard to their severity:

a) apply a pecuniary administrative sanction of from one thousand to one hundred and fifty thousand euro to the statutory auditor or statutory auditing company;

b) suspend from the Register for a period not exceeding five years the auditor responsible for the statutory audit of the accounts in which irregularities have been found;

c) revoke one or more of the statutory audit assignments;

d) ban the statutory auditor or statutory auditing company from accepting new statutory audits of the accounts appointments for a period not exceeding three years;

e) remove the statutory auditor, auditing company or the responsible auditor from the Register.

2. The Ministry of Economy and Finance shall provide for the removal from the Register of statutory auditors, auditing companies or responsible auditors who do not comply with the provisions indicated in section 1.

Article 25
(Disciplinary procedure)

1. The administrative sanctions provided for in this chapter shall be imposed by the Ministry of Economy and Finance with a reasoned order, after charging the interested parties within one hundred and eighty days or within three hundred sixty days from the ascertainment where the interested party resides or has its head office abroad, and evaluating the submissions made by them within thirty days.

2. The disciplinary proceedings are governed by the principles of cross-examination, knowledge of the investigative deeds, reports and a distinction between investigative functions and decision-making functions.

3. The decision to apply sanctions shall be published on the website referred to in Article 7, section 5. The Ministry of Economy and Finance, in view of the nature of the violation and the interests involved, may establish further methods of publicising its decision

4. Opposition may be brought against the provision for the application of sanctions as per this chapter before the Court of Appeal of the place in which the auditing firm or auditor perpetrating the violation belongs is located or, if these criteria do not apply, the place in which the breach was committed. The appeal must be notified to the Ministry of Economy and Finance and deposited with the clerk of the Court of Appeal within thirty days of notification

5. The appeal shall not stay enforcement of the decision. The Court of Appeal, if there are serious reasons, may order suspension by reasoned decree.

6. The Court of Appeal, at the request of the parties, may set deadlines for the submission of briefs and documents, and consent to personal hearings of the parties.

7. The Court of Appeal decides on the appeal in the council chamber, after hearing the public prosecutor, by reasoned decree.

8. Copy of the decision shall be sent by the clerk of the Court of Appeal to the Ministry of Economy and Finance for the purpose of publication on the website referred to in Article 7, section 5.

Article 26
(Consob rulings)

1. Consob, when it finds irregularities in the conduct of the audit, may, having regard to their severity:

a) apply a pecuniary administrative sanction of from ten thousand to five hundred thousand euro to the statutory auditor or statutory auditing company;

b) revoke one or more statutory auditing assignments with public interest entities;

c) ban the statutory auditor or statutory auditing company from accepting new statutory audits of the accounts appointments for a period not exceeding three years;

d) propose to the Ministry of the Economy and Finance the suspension of the auditor responsible for the statutory audit of the accounts in which irregularities have been found from the Register for a period not exceeding five years;

e) propose to the Ministry of Economy and Finance the removal from the Register of the statutory auditing company or the responsible auditor.

2. When the irregularity consists in the violation of the provisions of Article 17, the sanction provided for in section 7 of the same Article shall not prejudice the applicability of the measures referred to in paragraph 1 of this Article.

3. Consob shall propose to the Ministry of Economy and Finance the removal from the Register of statutory auditors, of all auditing companies or responsible auditors who do not comply with the provisions indicated in section 1.

4. If the violation complies with the provisions of Article 17 and is attributable to the partners, directors or employees of the auditing company entered in the Register, Consob may take steps against such persons in accordance with the measures in section 1, paragraphs d) and e).

5. Article 195 of the Consolidated Law of Financial Intermediation applies to the disciplinary proceedings provided for in this Article.

Article 27
(False reports or communications from those responsible for the statutory audit)

1. Responsible auditors who, in order to obtain for themselves or others an unjust profit, in reports or other communications, in full knowledge of the falsity and with intent to deceive the recipients of the communications, make false declarations or conceal information concerning the economic, equity or financial position of the company, entity or person who is subject to revision, in such a way as to mislead the recipients of the communications on the above situation, shall be punishable, if their conduct has not caused a loss of equity, with imprisonment of up to one year.

2. If the conduct referred to in section 1 has caused a loss of equity to the recipients of the communications, the penalty shall be imprisonment from one to four years.

3. If the offence referred to in section 1 is committed by the responsible statutory auditor of a public interest entity, the penalty shall be imprisonment from one to five years.

4. If the offence referred to in section 1 is committed by the responsible statutory auditor of a public interest entity for money or other benefit given or promised, or in concert with the directors, general managers or auditors of the company subject to audit, the penalty referred to in section 3 shall be increased by up to half.

5. The penalty referred to in sections 3 and 4 shall apply to those who give or promise the benefit and the general managers and members of the administrative or supervisory bodies of the public interest entity subject to the statutory audit who have contributed to commit the offence.

Article 28
(Corruption of auditors)

1. Responsible auditors who, following the giving or the promise of benefit, perform or omit acts in violation of the obligations inherent in their office, causing harm to the company, shall be punishable with imprisonment of up to three years. The same penalty applies to anyone who gives or promises benefit.

2. The responsible auditor and the members of the board, partners and employees of the statutory auditing company, who, in carrying out the statutory audit of public interest entities or companies controlled by them, except in the cases provided for in Article 30, for money or other benefit given or promised, perform or omit acts in breach of the obligations inherent in their office, shall be punishable with imprisonment from one to five years. The same penalty applies to anyone who gives or promises benefit.

3. These offences are officially prosecutable.

Article 29
(Impeding audits)

1. Members of the board who, by concealing documents or by other means, prevent or otherwise impede the carrying out of the statutory audit shall be punishable by a penalty of up to seventy-five thousand euro.

2. If the conduct referred to in section 1 has caused damage to partners or third parties, the offence is subject to a penalty of up to seventy-five thousand euro and eighteen months imprisonment.

3. In the case of a statutory audit of public interest entities, the penalties referred to in section 1 and 2 shall be doubled.

4. These offences are officially prosecutable.

Article 30
(Illegal remuneration)

1. The responsible auditor and the members of the board, partners and employees of the statutory auditing company, who receive, directly or indirectly, by the company subject to statutory audit, compensation in money or otherwise, other than that lawfully agreed upon, shall be punishable with imprisonment from one to three years and a fine of one thousand to one hundred thousand euro.

2. The same punishment applies to members of the board, managers and liquidators of companies subject to statutory audit who have paid sums not owed.

Article 31
(Illicit financial relationships with the company subject to auditing)

1. The directors and partners responsible for the statutory audit and employees of auditing companies which borrow in any form, either directly or through a third party, from the company subject to audit or a company that controls, or is controlled by it, or accept loans from such companies as guarantees for its own liabilities, shall be punishable with imprisonment from one to three years and a fine of 206 to 2,065 euro.

Article 32
(Common provisions)

1. If the acts referred to in Articles 27, sections 3, 4 and 5, 28, section 2, 30 and 31 lead to particularly serious damage to the statutory auditing company or the company subject to audit the penalty is increased by up to half.

2. Criminal sentences pronounced against the responsible auditor, the members of the board, partners and employees of the statutory auditing company for crimes committed in carrying out statutory audits shall be communicated to the Ministry of Economy and Finance and Consob by the clerk of the court which issued the judgement.

Chapter IX
INTERNATIONAL ASPECTS

Article 33
(International cooperation)

1. Consob is the competent authority to provide international cooperation in the matters governed by this decree, in the manner and under the conditions laid down in this chapter and Article 4 of the Consolidated Law on Financial Intermediation.

2. Consob is the point of contact for the receipt of requests for information from the competent authorities of other Member States of the European Union and Third countries in matters regarding statutory audits. Investigations carried out in the territory of the Republic on behalf of foreign authorities are subject to supervision by Consob or the Ministry of Economy and Finance, within their respective powers.

3. In the event that Consob or the Ministry of Economy and Finance should conclude that activities are under way or have been carried out which are contrary to provisions relating to statutory audits in the territory of another Member State, it shall notify the competent authority of the other Member State, of its conclusions and provide all the useful information.

4. In the event that a competent authority of another Member State shall notify Consob that activities are under way or have been carried out which are contrary to provisions relating to statutory audits in Italian territory, the Ministry of Economy and Finance and Consob, within their respective powers, shall take all necessary measures and notify the competent authority of the other Member State of the outcome and, where possible, any significant interim developments arising from its actions.

5. In the event that a statutory auditor or statutory auditing company subject to measures of suspension or cancellation in accordance with Articles 24 and 26 and, as reported in the Register, is found to be qualified and registered with other States belonging to the European Union, Consob shall notify the competent authorities of such States of the adoption of any measures and the reasons underlying them.

Article 34
(Inclusion of Third country auditors in the Register)

1. The Ministry of Economy and Finance, after consulting Consob, shall enter into the Register all Third country auditors and auditing entities that provide audit reports on the annual or consolidated accounts of a company incorporated in a Third country, whose transferable securities are admitted to trading on an Italian regulated market, except when the company is an issuer exclusively of debt securities admitted to trading on a regulated market the denomination per unit of which is at least fifty thousand euro or, in the case of debt securities denominated in another currency, equivalent, at the date of issue, to at least fifty thousand euro.

2. Entry into the Register shall be subject to the following conditions being met:

a) the auditor of the Third country shall comply with requirements equivalent to those laid down in Chapter II, with the exception of Article 5;

b) the majority of the members of the administrative or management body of an auditing entity of the Third country complies with requirements equivalent to those laid down in Chapter II, with the exception of Article 5;

c) the Third country auditors responsible for auditing the accounts on behalf of the auditing entity of the Third country meet requirements equivalent to those laid down in Chapter II, with the exception of Article 5;

d) the audit of the annual or consolidated accounts is carried out in accordance with the auditing standards referred to in Article 11, section 1, and with the obligations of independence and objectivity of Article 10, or with equivalent standards and requirements;

e) the statutory auditor or auditing entity of the Third country shall publish on its website an annual transparency report containing the information specified in Article 18 or complies with equivalent disclosure requirements.

3. The equivalence referred to in section 2, paragraph d) is evaluated in accordance with Article 45, paragraph 6 of EC Directive 2006/43.

4. The provisions of Article 7 shall apply.

5. The auditors and auditing entities from the Third countries listed in the Register are responsible for the information supplied for the purposes of registration and must promptly notify the entity in charge of keeping the Register of any change in this information.

6. The audit reports regarding annual or consolidated accounts of the entities referred to in section 1, issued by Third country auditors and audit entities not entered on the Register of Statutory Auditors shall have no legal effect.

7. The Ministry of Economy and Finance, after consulting Consob, shall regulate the implementation of this Article specifying in particular the procedures for application for entry into the Register by statutory auditors and for removal from the Register.

Article 35
(Supervision of statutory auditors and Third country auditing bodies)

1. Auditors and auditing entities from a Third country listed in the Register are subject to the systems of public oversight, quality control and investigations and penalties covered by this decree.

2. Auditors and auditing entities from a Third country listed in the Register may, on a reciprocal basis, be exempted from the quality control reviews covered by this decree, wherever they have been subject to quality control reviews by another Member State or a Third country considered equivalent in accordance with Article 46 of EC Directive 2006/43 during the three previous years.

3. The Ministry of Economy and Finance, after consulting Consob, shall issue a regulation for the implementation of section 2.

Article 36
(Exceptions in the event of equivalence)

1. The Ministry of Economy and Finance, after consulting Consob, may choose not to apply, in whole or in part, the provisions of Articles 34 and 35 with regard to the auditors or audit entities of Third countries subject, in the Third country in which they are located, to systems of public oversight, quality control, investigations and penalties that meet requirements equivalent to those provided for in Chapters VI, VII and VIII.

2. The exemptions or waivers referred to in section 1 shall be established on the basis of reciprocity and provided that agreements have been made for cooperation, including through exchange of information, documents and working papers, between the Italian authorities and the system of public oversight, control quality control, inquiry and penalty of the Third country.

3. The existence of equivalence is assessed in accordance with Article 46 of EC Directive 2006/43.

4. The Ministry of Economy and Finance, after consulting Consob, shall issue a regulation for the implementation of the present Article.

5. The Ministry of Economy and Finance shall notify the European Commission of:

a) the main elements of the cooperation arrangements referred to in section 2;

b) the equivalence assessments carried out in accordance with section 3.

Chapter X
AMENDING AND REPEALING CURRENT LEGISLATION

Article 37
(Amendments to the Civil Code)

1. At number 11) of the second section of Article 2328 of the Civil Code, the words: «to whom is entrusted the financial audit» shall be replaced by the following: «responsible for carrying out the statutory audit of the accounts».

2. At number 4) of the first section of Article 2335 of the Civil Code, the words: «to whom is entrusted the financial audit» shall be replaced by the following: «responsible for carrying out the statutory audit of the accounts».

3. At number 2) of the first section of Article 2364 of the Civil Code, the words: «to whom is entrusted the financial audit» shall be replaced by the following: «responsible for carrying out the statutory audit of the accounts».

4. At number 5) of the first section of Article 2364-bis of the Civil Code, the words: «the auditor» shall be replaced by the following: «the entity in charge of carrying out the statutory audit of the accounts».

5. In Article 2397, second section, of the Italian Civil Code, the words: «among those entered in the register of auditors maintained by the Ministry of Justice» are replaced by the following: «among the statutory auditors entered in the specific Register».

6. In Article 2399 of the Civil Code, second section, the words: «of the auditors» shall be replaced by the following: «of statutory auditors and statutory auditing companies»:

7. The heading of paragraph 4 of Section VI-bis, Chapter V, Title V, Book V of the Civil Code is replaced by the following: «Of the statutory audit of the accounts».

8. Article 2409-bis of the Civil Code is replaced by the following: «Article 2409-bis (Statutory audit of the accounts). - The statutory audit of the accounts of the company is carried out by a statutory auditor or a statutory auditing company entered in the specific Register».

The articles of association of companies that are not required to prepare consolidated financial statements may provide that the statutory audit is carried out by the Board of Statutory Auditors. In this case, the Board of Statutory Auditors is made up of statutory auditors entered in the Register».

9. 2409-ter, 2409-quater, 2409-quinquies, 2409-sexies of the Civil Code are hereby repealed.

10. In Article 2409-septies of the Italian Civil Code, the words: «of the financial audit» shall be replaced by the following: «of the statutory audit of the accounts».

11. In Article 2409-duodecies, fourth section, of the Italian Civil Code, the words: «those entered in the Register of auditors maintained by the Ministry of Justice» are replaced by the following: «the statutory auditors entered in the specific Register».

12. Article 2409-quinquiesdecies of the Civil Code is replaced by the following: «Article 2409-quinquiesdecies (Statutory auditing). - The statutory audit of the accounts is carried out in compliance with Article 2409-bis, first section».

13. In Article 2409-octiesdecies of the Civil Code, third section, the words: «those entered in the register of auditors» shall be replaced by the following: «the statutory auditors entered in the specific Register».

14. In Article 2409-octiesdecies of the Civil Code, fifth section, paragraph c), the words: «entities in charge of the audit» shall be replaced by the following: «the entity in charge of carrying out the statutory audit of the accounts».

15. Article 2409-noviesdecies of the Civil Code shall be subject to the following amendments:

a) the heading shall be replaced as follows: «Applicable legislation and statutory audit»;

b) the second section shall be replaced as follows: «The statutory audit of the accounts is carried out in compliance with Article 2409-bis, first section».

16. To Article 2427, first section, of the Civil Code, after number 16) the following shall be incorporated: «16-bis) unless the company is included in the scope of consolidation and the information is contained in the supplementary notes to its consolidated financial statements, the total amount of fees payable to the statutory auditor or statutory auditing company for the statutory audit of the annual accounts, the total fees charged for other audit services performed, the total fees charged for tax advisory services and the total fees charged for other non-audit services; ».

17. Article 2429 of the Civil Code shall be subject to the following amendments:

a) the first section after the words: «Board of Statutory Auditors» the following shall be incorporated: «and the entity in charge of carrying out the statutory audit of the accounts»;

b) the second section, the second sentence shall be deleted;

c) in the third section the words: «of the financial audit» shall be replaced by the following: «of the statutory audit of the accounts».

18. Article 2433-noviesdecies of the Civil Code shall be subject to the following amendments:

a) the first section the words: «to control by auditing companies registered in the Special Register» shall be replaced by the following: «to statutory audit in accordance with the system provided for by special laws for public interest entities»;

b) the second section the words: «of the auditing company» shall be replaced as follows: «of the entity in charge of carrying out the statutory audit of the accounts»;

c) the fifth and sixth sections, the words: «of the financial audit» shall be replaced by the following: «of the statutory audit of the accounts».

19. In Article 2434-bis, second section, of the Civil Code, the words: «the auditor has not submitted any observations» are replaced as follows: «the entity in charge of carrying out the statutory audit has made a judgement reporting the absence of irregularities».

20. In Article 2437-ter, second section, of the Civil Code, the words: «audit» shall be replaced as follows: «statutory audit of the accounts».

21. Article 2441 of the Civil Code shall be subject to the following amendments:

a) the fourth section the words: «by the company appointed to carry out the statutory audit» shall be replaced as follows: «by the statutory auditor or statutory auditing company»;

b) the sixth section the words: «of the financial audit» shall be replaced by the following: «of the statutory audit of the accounts».

22. Article 2447-ter, t he first section of the Civil Code, paragraph f) shall be replaced as follows: «f) the appointment of a statutory auditor or a statutory auditing company to audit the accounts of the business, when the company is not already subject to statutory audit;».

23. The first section of article 2447-nonies of the Civil Code, the words: «audit» shall be replaced as follows: «statutory audit of the accounts».

24. In Article 2463, second section, paragraph 8), of the Civil Code, the words: «any entities in charge of the audit» shall be replaced as follows: «any entities in charge of carrying out the statutory audit of the accounts».

25. The first section of Article 2465 of the Civil Code, the words: «of an expert or an auditing company entered in the Register of auditors or of a statutory auditing company registered in the Special Register» shall be replaced as follows: «of a statutory auditor or a statutory auditing company entered in the Register».

26. Article 2477 of the Civil Code shall be replaced as follows: "Art. 2477 (Board of Statutory Auditors and statutory audit of the accounts). -The deed of incorporation may provide for determining the competences and powers and appointment of a Board of Statutory Auditors or of an auditor. The appointment of the Board of Statutory Auditors is required if share capital is not less than the minimum established for public limited companies. The appointment of the Board of Statutory Auditors is also required if the company: a) is responsible for preparing the consolidated financial statements; b) controls a company required to perform statutory audits; c) for two consecutive financial years it has exceeded two of the limits indicated by the first section of Article 2435-bis. The obligation to appoint the Board of Statutory Auditors referred to in paragraph c) of the third section shall cease if for two consecutive financial years, these limits are not exceeded. In the cases provided for by the second and third sections the provisions concerning public limited companies shall apply; if the deed of incorporation does not provide otherwise, the statutory audit is carried out by the Board of Statutory Auditors. The shareholders' meeting approving the financial statements where the limits are exceeded indicated in the second and third sections must proceed, within thirty days, to the appointment of the Board of Statutory Auditors. If the shareholders' meeting does not do so, the court will appoint one at the request of any interested subject.

27. Article 2478 of the Civil Code, number 4) of the first section, the words: «or appointed auditor» shall be replaced as follows: «appointed» and in the second section the words: «or auditor» shall be deleted.

28. In Article 2479, second section, paragraph 3), of the Civil Code, the words: «of the auditor» shall be replaced as follows: «of the entity in charge of carrying out the statutory audit of the accounts».

29. Article 2482-noviesdecies of the Civil Code shall be subject to the following amendments:

a) the second section the words: «or the auditor» shall be replaced as follows: «or the entity in charge of carrying out the statutory audit of the accounts»;

b) the fourth section the words: «or the auditor» shall be replaced as follows: «or the entity in charge of carrying out the statutory audit of the accounts»;

30. In Article 2492, second section, of the Italian Civil Code, the words: «of the audit» shall be replaced as follows: «for carrying out the statutory audit of the accounts».

31. The fifth section of Article 2501-bis of the Civil Code, the words: «by the company appointed to carry out the obligatory statutory audit» shall be replaced as follows: «by the entity in charge of carrying out the audit of the accounts».

32. The second sentence of the third section of Article 2501-sexies of the Civil Code shall be replaced as follows: «If the company is listed on regulated markets, the expert is chosen from among the auditing companies supervised by the National Commission for Listed Companies and the Stock Exchange».

33. In Article 2501-septies of the Civil Code, first section, number 2), the words: «the audit» shall be replaced as follows: «the statutory audit».

34. Article 2624 of the Civil Code is abrogated.

35. Article 2625, first section of the Civil Code shall be subject to the following amendments:

a) the words: «or audit» shall be deleted.

b) the words: «, to other corporate bodies or auditing companies» shall be replaced as follows: «or other corporate bodies».

36. In Article 2635, first section, of the Civil Code, the words: «, liquidators and responsible auditors» shall be replaced as follows: «and liquidators».

Article 38
(Amendments to Legislative Decree 127 of 9 April 1991)

1. Article 38, section 1, of Legislative Decree 127 of 9 April 1991, after the letter o-sexies) the following shall be incorporated: «o-septies) separately, the amount of fees payable to the statutory auditor or statutory auditing company to audit the consolidated accounts, for other audit services, tax advisory services and other non-statutory audit services provided to the group».

2. Article 41 of Legislative Decree 9 April 1991 no. 127, shall be replaced as follows: «Article 41 (Statutory audit of consolidated financial statements). - 1. The consolidated financial statements are subject to statutory audit. 2. The statutory audit of the consolidated financial statements shall be entrusted to the entity carrying out the audit of the financial statements of the company preparing the consolidated financial statements. 3. The consolidated financial statements and the related management report shall be communicated together with the financial statements for the statutory audit. 4. A copy of the consolidated financial statements with the management report and the audit report is filed during the fifteen days prior to the shareholders' meeting called to approve the financial statements and until it is approved. Shareholders can access them».

Article 39
(Amendments to the Consolidated Law on Banking)

1. After section 1 of Article 51 of the Consolidated Law on Banking, referred to in Legislative Decree no. 385 of 1 September 1993, and later amendments, the following shall be added: «1-bis. The banks notify the Bank of Italy: a) the appointment and non-appointment of the entity carrying out the statutory audit of the accounts; b) the resignation of the entity carrying out the statutory audit of the accounts; c) the consensual termination of the mandate; d) the revocation of the statutory audit appointment, providing adequate explanations on the reasons that led to it. 1-ter. The Bank of Italy shall establish terms and conditions for the submission of the reports referred to in section 1-bis».

2. Article 52 of Legislative Decree 385 of 1 September 1993 the following amendments shall be made: a) the heading shall be replaced as follows: «Communications of the Board of Statutory Auditors and the entities responsible for carrying out the statutory audits of the accounts»; b) section 2, the words: «of the audit or financial audit» shall be replaced as follows: «of the statutory audits of the accounts»; c) section 2-bis is hereby repealed.

3. Article 72 of Legislative Decree 385 of 1 September 1993 the following amendments shall be made: a) section 5, the words: «of the financial audit» shall be replaced by the following: «of the statutory audits of the accounts»; b) section 5-bis the words: «of the financial audit or audit» shall be replaced as follows: «of the statutory audit of the accounts».

4. Article 84, section 5, of Legislative Decree no. 385 of 1 September 1993, the words: «of the financial audit or audit» shall be replaced as follows: «of the statutory audit of the accounts».

Article 40
(Amendments to the Consolidated Law on Financial Intermediation)

1. Article 8 of the consolidated provisions on financial intermediation, in accordance with Legislative Decree no. 58 of 24 February 1998, the following amendments shall be made:

a) section 2, the words: «by the company appointed to carry out the audit» shall be replaced as follows: «by the entity in charge of carrying out the statutory audit of the accounts»;

b) section 4, the words: «the company appointed to carry out the audit» shall be replaced as follows: «the entity in charge of carrying out the statutory audit of the accounts»;

c) section 5, the words: «the company appointed to carry out the audit» shall be replaced as follows: «the entity in charge of carrying out the statutory audit of the accounts»;

2. Article 9 of Legislative Decree 24 February 1998 no. 58, shall be replaced as follows: «Article 9 (Statutory audit). - 1. The provisions of Article 159, section 1 apply to stock broking companies, asset management companies and SICAVs. 2. Regarding asset management companies, the statutory auditor or statutory auditing company responsible for the audit shall make provision in a specific audit report for an opinion on the financial statements of the mutual fund».

3. Article 10, section 1-bis of Legislative Decree no. 58 of 24 February 1998, the words «the company appointed to carry out the audit» are replaced as follows: «the entity in charge of carrying out the statutory audit of the accounts».

4. Article 25 of Legislative Decree 58 of 24 February 1998 the following amendments shall be made:

a) section 4, the words: «the company appointed to carry out the audit» shall be replaced as follows: «the entity in charge of carrying out the statutory audit of the accounts»;

b) section 5, the words: «the company appointed to carry out the audit» shall be replaced as follows: «the entity in charge of carrying out the statutory audit of the accounts»;

5. Article 48, section 5, of Legislative Decree no. 58 of 24 February 1998, the words: «the company appointed to carry out the audit» shall be replaced as follows: «by the entity in charge of carrying out the audit of the accounts».

6. Article 61, section 9, of Legislative Decree no. 58 of 24 February 1998, the words: «, 158, 165 and 165-bis» shall be replaced by the following: « and 158».

7. Article 96 of Legislative Decree 24 February 1998 no. 58, shall be replaced as follows: «Article 96 (Financial statements of the issuer). - 1. The last financial statements and any consolidated financial statements prepared by the issuer shall be accompanied by audit reports in which a statutory auditor or an statutory auditing company entered in the Register kept by the Ministry of Economy and Finance shall express their opinion. Any offer concerning financial products other than European Community financial instruments can not be made if the statutory auditors or the statutory auditing company have expressed an adverse opinion or declared their inability to express an opinion».

8. Section 3 of Article 97 of Legislative Decree 24 February 1998 no. 58, shall be replaced as follows: «3. The issuer shall submit the annual financial statements and consolidated financial statements, possibly agreed or drawn up during the period of the offer, to the judgement of a statutory auditor or a statutory auditing company entered in the appropriate register».

9. Article 115, section 1, paragraph b) of Legislative Decree no. 58 of 24 February 1998, the words: «of the auditing company» shall be replaced as follows: «statutory auditors and statutory auditing companies»:

10. Section 2 of Article 116 of Legislative Decree 24 February 1998 no. 58, shall be replaced as follows: «2. The provisions of Part IV, Title III, Chapter II, Section VI, shall apply to the issuers referred to in section 1 with the exception of Articles 157 and 158».

11. Article 150, section 3 of Legislative Decree no. 58 of 24 February 1998, the words «the company appointed to carry out the audit» shall be replaced as follows: «by the statutory auditor or statutory auditing company».

12. Article 154-ter of Legislative Decree 58 of 24 February 1998 the following amendments shall be made:

a) section 1, second sentence, the words: «according to Article 156» shall be replaced as follows: «prepared by the statutory auditor or statutory auditing company»;

b) section 2, the words: «of the auditing company» shall be replaced as follows: «by the statutory auditor or statutory auditing company».

13. The heading of Part IV, Title III, Chapter II, Section VI is replaced as follows: «Statutory audit of the accounts».

14. Section 2 of Article 155 of Legislative Decree 24 February 1998 no. 58, shall be replaced as follows: «2. The statutory auditor or statutory auditing company shall immediately notify Consob and the supervisory body of facts deemed reprehensible which emerged in the carrying out of the statutory audit on financial statements and consolidated financial statements».

15. Section 4 of Article 156 of Legislative Decree 24 February 1998 no. 58, shall be replaced as follows: «4. In the case of negative opinion or declaration of inability to express an opinion or in the presence of requests for information relating to significant doubts about the company as a going concern the statutory auditor or statutory auditing company shall promptly inform Consob».

16. Article 158 of Legislative Decree 58 of 24 February 1998 the following amendments shall be made:

a) section 1, first sentence, the words: «by the company appointed to carry out the statutory audit» shall be replaced as follows: «by the entity in charge of carrying out the statutory audit of the accounts»;

b) section 1, second sentence, the words: «of the auditing company» shall be replaced as follows: «of the statutory auditor or statutory auditing company»;

c) sections 2 and 3, the words: «the auditing company» are replaced as follows «the statutory auditor or statutory auditing company».

17. Section 1 of Article 159 of Legislative Decree 24 February 1998 no. 58, shall be replaced as follows: «1. In case of non-appointment of the statutory auditor or statutory auditing company, the company required to make the appointment must promptly notify Consob, explaining the causes of the delay in conferring the appointment».

18. Section 4 of Article 165-quater of Legislative Decree no. 58 of 24 February 1998 shall be replaced as follows: «4. The financial statements of the foreign subsidiary, attached to the budget of the Italian company in accordance with section 1, shall be audited by the statutory auditor or statutory auditing company appointed to audit the financial statements of the Italian company, if that entity does not operate in the State in which the foreign subsidiary has its head offices, it must make use of another suitable auditor or auditing company, taking responsibility for the work of the latter. Where the Italian company which is free of this obligation, has not appointed a statutory auditor of the accounts or a statutory auditing company, it must in any case make such an appointment in relation to the financial statements of the foreign subsidiary».

19. Article 165-quater, section 5, of Legislative Decree no. 58 of 24 February 1998, the words: «by the company» shall be replaced as follows: «by the entity».

20. At Article 193 of Legislative Decree 24 February 1998 no. 58, the title shall be replaced as follows: «Corporate information and duties of the board of auditors, statutory auditors and statutory auditing companies».

21. Articles 12, section 4, 155, sections 1 and 3, 156, sections 1, 2, 3, 4-bis and 5, 159, sections 2, 3, 4, 5, 6, 7 and 8, 160, 161, 162, 163, 164, 165, 165-bis, 174-bis, 174-ter, 177, 178, 179 and 193, section 3, paragraph b) of Legislative Decree no. 58 of 24 February 1998 shall be repealed.

Article 41
(Amendments to the Private Insurance Companies Code)

1. The heading of Chapter V of Title VIII of Legislative Decree no. 209 of 7 September 2005 shall be replaced as follows: «Statutory audit of the accounts».

2. Article 102 of Legislative Decree 209 of 7 September 2005 the following amendments shall be made:

a) the heading shall be replaced as follows: «Statutory audit of financial statements»;

b) section 1 shall be replaced as follows: «1. The financial statements of insurance and reinsurance companies with head offices in the territory of the Republic and of the branch offices in the territory of the Republic, insurance and reinsurance companies with head offices in a Third State shall be accompanied by the report of a statutory auditor or statutory auditing company entered in the Register. If the statutory audit appointment is conferred on a statutory auditing company, at least one of its directors shall be registered as a professional actuary under Law no. 194 of 9 February 1942. If the statutory audit appointment is conferred on a statutory auditor, the provisions of Article 103 shall apply»;

c) section 2, the words: «the auditing company who drafted the audit opinion in accordance with Article 156 of the consolidated provisions on financial intermediation» shall be replaced as follows: «by the statutory auditor or statutory auditing company»;

d) section 3 shall be replaced as follows: «3. The provisions on statutory auditing of the accounts in Section VI of Chapter II of Title III of the consolidated provisions on financial intermediation, shall apply to the companies referred to in section 1 with the exception of Articles 155, section 2, Article 156, section 4, 157, section 2, and Article 159, section 1»;

e) section 5 shall be repealed.

3. Article 103 of Legislative Decree 7 September 2005 no. 209, shall be replaced as follows: "Article 103 (Actuary appointed by the statutory auditor or statutory auditing company). - 1. If the statutory audit appointment is given to a statutory auditor or the directors of the auditing firm do not include an actuary in the professional registers in accordance with Law no. 194 of 9 February 1942, the report referred to in Article 102, section 1, shall be accompanied by the report of an actuary appointed by the statutory auditor or statutory auditing company. 2. The appointment of the actuary has a term of nine years and can not be renewed or re-appointed, even on behalf of a different statutory auditing company, unless at least three years have elapsed from the date of termination of the previous appointment. If, before the expiry of the period, the statutory auditor or statutory auditing firm revokes the appointment of the actuary, this shall be communicated immediately to ISVAP and the reasons for it explained. The revocation takes effect when the appointment of another actuary has become effective. 3. The appointment can not be conferred on an actuary who does not comply with the conditions of independence identified by ISVAP regulations or who, in relation to the insurance or reinsurance company or in relation to the actuary who acts as actuary for life insurance or civil liability insurance arising from the use of motor vehicles and craft, is in one of the situations of incompatibility identified by ISVAP regulations. 4. The actuary and the legal representative of the insurance or reinsurance company in which he/she carries out his/her assignment, shall communicate to ISVAP, within fifteen days of the appointment, the documentation proving the conditions of independence and absence of incompatibility referred to in paragraph 3 according to the provisions drawn up by ISVAP».

4. Article 104 of Legislative Decree 7 September 2005 no. 209, shall be replaced as follows: «Article 104 (Accounting management investigations). - 1. The ISVAP may require that the statutory auditor or statutory auditing company carry out a review, upon ascertaining the exact data entry in the accounting records, in order to comply with the accounting entries of the periodic situations concerning the balance sheet and the income statement of the company. In the course of such review, the statutory auditor or statutory auditing company shall make use of the actuary. The expenses shall be borne by the company.

5. Article 105 of Legislative Decree 209 of 7 September 2005 the following amendments shall be made:

a) section 1, the words: «by the auditing company» shall be deleted;

b) section 1, the words: «of the auditing company» shall be replaced as follows: «by the statutory auditor or statutory auditing company»;

c) section 2, after the words: «103, section 3,» are inserted as follows: «, the loss of a condition of independence laid down in article 103, section 3,»;

d) section 3, the words: «of the auditing company» shall be replaced as follows: «of the statutory auditor or statutory auditing company»;

e) section 3, the words: «the auditing company» shall be replaced as follows: «the statutory auditor or statutory auditing company».

6. Article 190 of Legislative Decree 209 of 7 September 2005 the following amendments shall be made:

a) section 2, the words: «of the auditing company» shall be replaced as follows: «by the entity in charge of carrying out the statutory audit of the accounts»;

b) after section 5 the following sections are added in order: «5-bis. Insurance and reinsurance undertakings shall communicate promptly to ISVAP: a) the appointment and non-appointment of the entity responsible for the statutory audit, setting out the reasons that led to the delay in the appointment;

c) the resignation of the entity responsible for the statutory audit; c) consensual resolution of the mandate; d) revocation of the appointment of the statutory auditor of the accounts, providing adequate explanations regarding the reasons that led to the decision. 5-ter. ISVAP shall establish the terms and conditions for the submission of the reports referred to in section 5-bis. In the event of failure to appoint the person in charge of the statutory audit of the accounts, ISVAP shall take precautionary and authoritative measures and impose sanctions in accordance with the code.».

7. Article 1, section 310, of Legislative Decree no. 209 of 7 September 2005, the words: «190, section 1,» shall be replaced as follows: «190, sections 1 and 5-bis».

8. Article 321 of Legislative Decree 209 of 7 September 2005 the following amendments shall be made:

a) section 3 shall be replaced as follows: «3. The ISVAP shall notify the Ministry of Economy and Finance and Consob of sanctions imposed on statutory auditors and statutory auditing companies. The Ministry of Economy and Finance and Consob shall inform ISVAP of provisions taken.»;

b) section 4 shall be repealed.

9. At Article 322 of Legislative Decree 7 September 2005 no. 209, the title shall be replaced as follows: «Duties of the statutory auditor or statutory auditing company».

10. Article 322, section 1, of Legislative Decree no. 209 of 7 September 2005, the words: «the legal representatives of the auditing company» shall be replaced as follows: «the statutory auditor and the legal representatives of the statutory auditing company».

11. Article 322, section 2, of Legislative Decree no. 209 of 7 September 2005, the words: «of the legal representatives of the auditing company» shall be replaced as follows: «of the statutory auditor and the legal representatives of the statutory auditing company».

12. Article 323 of Legislative Decree 209 of 7 September 2005 the following amendments shall be made:

a) section 1, number: «3» of the first sentence shall be replaced as follows: «4»;

b) to section 1, after the first sentence, the following shall be incorporated: «To the actuary appointed by the statutory auditor or statutory auditing company of an insurance or reinsurance company which violates Article 103, section 3, pecuniary administrative sanctions from one hundred thousand to five hundred thousand euro shall apply. Penalties for the offence of bribery of the auditor also apply.».

Article 42
(Staff)

1. In order to ensure the effective and proper performance of the functions vested in the Ministry of Economy and Finance under this Decree, in the first application of this same Decree, the aforementioned Ministry, using the resources laid down in article 14, section 1, of Legislative Decree no. 262 of 3 October 2006, converted, with amendments, by Law no. 286 of 24 November 2006, and within the spending limit of 300,000 euro per year starting from the year 2010, can confer up to three non-general executive-level appointments as an exception to the quantitative limit laid down in Article 19, section 6 of Legislative Decree no. 165 of 30 March 2001, and subsequent amendments, as well as from the prohibitions and restrictions laid down in the applicable legislation. The aforementioned appointments are conferred on positions identified within the scope of the Ministry by decree to be issued in accordance with Article 17, section 4-bis, paragraph e) of Law no. 400 of 23 August 1988 and Article 4, sections 4 and 4-bis of Legislative Decree no. 300 of 30 July 1999.

2. A Central Commission for Auditors, with advisory functions, shall be set up at the Ministry of Economy and Finance without any new or increased charges to be borne by the State budget. The financial and material resources of the Commission provided for in Article 1 of the Decree of the President of the Republic no. 99 of March 6 1998, shall be transferred to it and the former shall be suppressed. The functions of the Commission

as well as its composition and remuneration shall be established by decree of the Ministry of Economy and Finance. The Ministry of Economy and Finance shall be authorised to make the necessary changes to the budget.

Article 43
(Repeals and final and transitional provisions)

1. The following are hereby repealed but continue to apply until the date of entry into force of the Regulations of the Ministry of Economy and Finance issued in accordance with this Decree:

a) Legislative Decree no. 88 of 27 January 1992;

b) Law no. 132 of 13 May 1997;

c) Decree of the President of the Republic no. 99 of 6 March 1998;

d) Law no. 222 of 8 July 1998;

e) Law no. 266 of 30 July 1998;

f) Decree of the President of the Republic no. 233 of 12 July 2000;

g) Legislative Decree no. 28 of 23 January 2006;

h) Article 52, section 2-bis of Legislative Decree no. 385 of 1 September 1993;

i) Article 161 of Legislative Decree no. 58 of 24 February 1998;

j) Article 162, sections 3 and 3-bis of Legislative Decree no. 58 of 24 February 1998;

k) Article 163, section 1, paragraph b), section 2, paragraphs a), b) and c), section 4 and section 5, of Legislative Decree no. 58 of 24 February 1998;

l) Article 2409-quinquies of the Civil Code.

2. The provisions issued by Consob in accordance with the rules repealed or replaced by this decree shall continue to apply, insofar as they are compatible, up to the date of entry into force of the provisions issued by Consob in accordance with this decree in the corresponding matters. In particular, until the date of entry into force of the Regulations referred to in Article 16, the conferment and duration of audit appointments with the subsidiaries of listed companies, companies that control listed companies and companies subject with them to joint control, continue to be regulated by Articles 165, sections 1 and 2, 165-bis, sections 1 and 2, of Legislative Decree 24 no. 58 of February 1998 and its implementation provisions issued by Consob.

3. The auditing standards that were issued in accordance with Article 162, section 2, paragraph a) of Legislative Decree no. 58 of 24 February 1998 on the date of entry into force of this Decree shall continue to apply until the date of entry into force of the auditing standards issued in accordance with Article 11 of this Decree. Until the signing of the agreement referred to in Article 12, section 1, the auditing standards are issued in accordance with Article 162, section 2, paragraph a) of Legislative Decree no. 58 of 24 February 1998.

4. Until the issue of the measures provided for in Articles 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 17, 20, statutory auditor refers to the entity entered in the Register of auditors in accordance with Legislative Decree no. 88 of 27 January 1992 and statutory auditing companies refers to the auditing companies registered in the special Register of auditing companies in accordance with Article 161 of Legislative Decree no. 58 of 24 February 1998 or in the Register referred to in Legislative Decree no. 88 of 27 January 1992.

5. Until the issue of the measures provided for in section 1, statutory auditors and statutory auditing companies other than those entered in the Register referred to in Article 161 of Legislative Decree no. 58 of 24 February 1998 can not carry out statutory audits of public interest entities.

6. As an exception to section 5, appointments which had already been conferred on the date of entry into force of this Decree «in the current year» shall be deemed to have already been conferred in accordance with Article 2409-quater of the Civil Code and shall continue until the first end of the mandate following the issue of the measures referred to in section 1.

7. Until the issue of the measures referred to in section 1, Consob shall carry out the supervisory activities referred to in Article 22, section 1, in relation to the entities entered in the Register referred to in Article 161 of Legislative Decree no. 58 of 24 February 1998.

8. The natural persons and companies which, at the time of entry into force of the Register referred to in Chapter III, are already entered in the Register of auditors referred to in Article 1 of Legislative Decree no. 88 of 27 January 1992, have the right to enter the Register referred to in Article 2 and in the Special Register of auditing companies referred to in Article 161 of Legislative Decree no. 58 of 24 February 1998.

9. Until the date of entry into force of the measures referred to in section 1, Consob shall provide for the registration of auditors and audit entities from the Third countries referred to in Article 34, section 1, in a special section of the Special Register of auditing companies referred to in Article 161 of Legislative Decree no. 58 of 24 February 1998 according to the terms and conditions established by the same.

10. The fees in the agreements referred to in Article 21, section 3, shall be determined within the limits of the amount of resources referred to in Article 21, section 7, and taking into account of other costs arising from the activities in this decree.


Footnotes:

1 Published in Ordinary Supplement no. 58/L of Official Gazette no. 68 of 23.3.2010.

2 In implementation of the provisions of this letter see D.M. no. 145 of 20 June 2012.

3 In implementation of the provisions of this letter see D.M. no. 145 of 20 June 2012.

4 In implementation of the provisions of this letter see D.M. no. 145 of 20 June 2012.

5 In implementation of the provisions of this letter see D.M. no. 145 of 20 June 2012.

6 In implementation of the provisions of this letter see D.M. no. 145 of 20 June 2012.

7 In implementation of the provisions of this section see D.M. no. 145 of 20 June 2012.

8 In implementation of the provisions of this section see D.M. no. 146 of 25 June 2012.

9 In implementation of the provisions of this section see D.M. no. 144 of 20 June 2012.

10 In implementation of the provisions of this section see D.M. no. 145 of 20 June 2012.