Italy, new false accounting law closes the gap with US, France, Germany legislation (May 23rd, 2015)

Source: Il Sole 24 Ore  also available in Italian

  • by Giovanni Negri

Record sanctions, but not only.
The reform of false accounting rules newly-approved by the Italian parliament takes the country's legislation closer to those of advanced capitalistic countries.
Jail sentences for up to eight years for crimes committed by market-listed companies make Italy stand out as one of the countries with the toughest response against this type of corporate crime. In line with other European regulations, the crime is seen as dangerous (it's not necessary to prove the damage, as instead currently expected in some cases, especially of non-listed companies). France, Germany, Britain, Spain and the United States are on the same page.
Differences instead remain concerning the statute of limitations.
As the Senate discusses a more general reform on this issue, under the current rule the statute of limitations expires after a number of years equal to the maximum jail period of five years for unlisted companies and eight years for companies trading on the stock exchange.
The French law is different.
In general, the statute of limitations expires three years after the event has occurred; according to court rulings, however, the publication of false accounting can be connected with a further autonomous crime related to the presentation, which triggers another statute of limitations.
In Germany, when there is knowledge of the act of false representation from the community (moment when the act is considered as completed) a five-year status of limitation starts based on the criminal code (Strafgesetzbuch – StGB), which assigns a jail sentence of between one to five years. Spain has the same five-year period.


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Another important aspect of the Italian reform is the distinction between listed and unlisted companies.
This difference cannot be found abroad, where instead the same sanction applies independently from whether the company is listed on the stock market and from the types of company.
In France, for example, limited liability companies and joint-stock companies would face three years in jail and €375,000 of fines.
Also in Germany there is no difference between the type of companies: corporate crime rules foresee the same jail term of three years and unlimited fines for joint-stock companies, unlimited or general partnerships and limited liability companies.
The general rule is designed to protecting balance sheets, while special provisions protect the truthfulness of financial communications.
Shared in all Europe, with the partial exception of Spain, is the power of investigation “by right of office,” or in other words without waiting for a complaint or a lawsuit (as was the case with the “old” version of the Italian law in some cases).
Now the reform extends this “by right of office” form of prosecution, leaving the need of a third-party complaint to a limited share of cases of false accounting from very small companies.