The power granted to the shareholders in an ordinary general
meeting to resolve, in certain situations, on matters relating
to the management of the company should not be interpreted as
releasing the directors from their duties in relation to such
This interpretation, supported by many in doctrine, has been
further confirmed by a first instance decision (Tribunal of
Article 2364 of the civil code sets out the functions of the members of the company in an ordinary general meeting. In addition to the specific tasks of approval of the annual accounts, appointment of directors and auditors and determining the remuneration, and where necessary, the liability of the same, paragraph 4 provides generally that the general meeting shall resolve on other matters which pertain to the management of the company and which are reserved to the competence of the general meeting by the articles of association or which are submitted for its consideration by the directors.
This paragraph 4 has been the subject of much debate as to the extent of the general meeting's powers in relation to decisions taken in this manner on management acts. The restrictive, and preferred, interpretation is that resolutions of the general meeting on such matters, even where specifically referred to the meeting by the directors, should be given the weight of, and classified as, non-binding opinions. The directors should not therefore merely proceed with the automatic performance of any such resolution, but should act in accordance only in the event that they agree with the content thereof and consider the act to be legitimate.
The rationale behind this interpretation is that only the directors are always liable to third parties and creditors for certain acts of mismanagement which could prejudice the interests of such parties. Otherwise, referring the decision on such matters to the general meeting would be a convenient way of avoiding liability and leaving the above without any form of protection. The directors will therefore remain liable for their actions even where the act in question has been resolved upon by the general meeting. They will retain competence for the final decision after having taken into account the resolution of the general meeting, and should not be compelled to carry out acts which have been decided on by other organs of the company and with which they do may not entirely agree.
Practical Pointer: Directors of an Italian company should always check the legitimacy of their management acts, even when they have received approval from the shareholders' general meeting.