Under Italian law, business organisations can take the form of personal partnerships and corporations. The difference between these two types of business organisation is that corporations enjoy limited liability to the extent of the corporate capital, while participants in a partnership can be held personally liable for the activity carried out by the organisation. Furthermore, partnerships have a more simplified organisational structure.

The main forms of corporation under Italian law are joint stock corporations (Società per azioni ‒ SpAs) and limited liability companies (Società a responsabilità limita – Srls).

In Spas, where the corporate capital is split into shares, the main corporate bodies are: 

• the shareholders’ meeting; 
• the governing body (usually a board of directors); and 
• the board of statutory auditors.

In Srls, where the corporate capital is made up of quotas, the main corporate bodies are: 

• the quotaholders’ meeting; 
• the governing body (normally a sole director or a board of directors); and
• the board of statutory auditors (only in certain cases when required by law). 

The main source of legislation regulating corporate governance is the Italian Civil Code (ICC). The Consolidated Act on Finance enacted by Legislative Decree No 58/1998, as last amended by Legislative Decree No 23/2019 (TUF), is also a primary source for listed companies. Listed companies may choose to comply (under the "comply or explain" principle) with the provisions of the Corporate Governance Code issued by the Corporate Governance Committee of the Italian stock exchange (the "Governance Code").

In addition to the ICC, the TUF provides for other mandatory requirements applicable to publicly listed companies. It provides for, inter alia, additional integrity and independence requirements that must be fulfilled by the individuals performing management and control roles in companies with publicly traded shares. 

The Governance Code (Codice di Autodisciplina), issued by the Italian stock exchange, lays down further rules on the corporate governance of listed companies. Even though these rules are not binding, such companies must keep the market and their shareholders informed of their governance structure and degree of compliance with the same Governance Code.

The main hot topics in corporate governance within the Italian jurisdiction are the following.

• Sustainability and corporate social responsibility: attention is growing towards the environmental, social and economic sustainability of companies. Corporate governance must take these issues into consideration, for example through the definition of corporate social responsibility policies, ethical codes and sustainability programmes.
• The gap between manager and employee remuneration: more attention is being paid to the gap between manager and employee remuneration. It appears necessary to guarantee correct remuneration for managers, also taking into consideration the financial sustainability of the company and the balance with the employees’ remuneration and their rights.
• The role of shareholders and the participation of minorities in the strategic decisions of the company: corporate governance should be aimed at transparency and shareholder participation in the company’s strategic decisions; furthermore, it should ensure adequate representation of minorities on the board of directors and in the company’s decision-making processes.
• Digitisation and innovation: corporate governance must take these aspects into account, for example through the definition of data management policies, cybersecurity programmes and innovative business models.
• Crisis management: crisis management is an ever-green topic in corporate governance. Corporate governance must ensure proper crisis management, for example through the definition of contingency plans, risk management policies and internal control mechanisms.

Legislative Decree No 254/2016, which implemented Directive 2014/95/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, provides that large companies (ie, companies that have had, during the financial year, more than 500 employees and have exceeded at least one of the following two dimensional limits: (i) total balance sheet of EUR20 million, (ii) total net revenues of EUR40 million) must present an individual declaration on non-financial information such as environmental, anti-corruption issues, human rights and board diversity.

The governance and management of the company is the responsibility of the management body.

In SpAs, the most common model of corporate governance is the traditional model (modello tradizionale), which establishes that the company is managed either by a sole director (amministratore unico), or a board of directors composed of two or more directors (consiglio di amministrazione).

Alternatively, the SpA may adopt: 

• the two-tier or dualistic model (modello dualistico), according to which the company is managed by a management board (consiglio di gestione) which is appointed by the supervisory board (consiglio di sorveglianza), while the supervisory board is appointed by the shareholders; or 
• the one-tier or monistic model (modello monistico), according to which the company is managed by a board of directors (consiglio di amministrazione) which is appointed by the shareholders meeting – the board of directors elects the controlling body (comitato per il controllo sulla gestione) from among its members.

For listed companies, the Governance Code establishes the rule that the company must provide prior information on the reasons why and manner(s) in which it intends to adopt a non-traditional model.

In Srls, the management body might be either a sole director, two or more directors, with joint or separate powers, or a board of directors composed of two or more directors.

As a general rule and unless the by-laws provide otherwise, the management body has the power to manage the company and to carry out any act of ordinary and extraordinary management of the company, except for those matters reserved to the shareholders/quotaholders by the law or the by-laws, such as: 

• approval of the annual financial statements and distribution of dividends within 120 days (or, in the case of postponement for justified reasons, 180 days) after the end of the fiscal year; 
• appointment and remuneration of the members of the management body; 
• appointment of statutory auditors and external auditors; 
• responsibility of directors and statutory auditors; 
• amendments to the by-laws; 
• reduction of the corporate capital for loss; and 
• appointment and revocation of liquidators.

In exceptional cases in which the management body is unable to perform its function, the decisions can be taken by the supervisory board.

The directors have joint and several power to manage the company and to carry out any act of ordinary and/or extraordinary administration; the decision process is not subject to specific formalities, but the majority rule is often used in case of disagreement on some decisions.

According to Article 2380-bis, paragraph 4, of the ICC, if the by-laws make no provision for the number of directors, but indicate only the maximum and minimum number, the number is determined by the shareholders’ meeting.

Either a sole director or a number of directors may be appointed in unlisted SpAs, but a board of directors must be appointed in listed companies. 

The board of directors selects the chairperson from among its members, unless they are appointed by the meeting.

According to Article 2386 of the ICC, if in the course of the fiscal year a vacancy for one or more directors occurs, the others provide for their replacement by resolution approved by the board of statutory auditors, provided that the majority is always constituted by directors appointed by the meeting. The directors so appointed remain in office until the next meeting.

If vacancies of a majority of the directors appointed by the meeting occur, those who remain in office shall call a meeting to provide for filling the vacancies.

In SpAs, under Article 2380-bis of the ICC, the directors are exclusively entitled to manage the company and they shall act as necessary to pursue the corporate purpose. 

If the by-laws or the shareholders’ meeting so allows, the board of directors may delegate its functions to an executive committee composed of some of its members.

In Srls, under Article 2475 of the ICC, when the management is entrusted to various persons, those persons represent the board of directors, but the by-laws may provide that the management is entrusted to them on a joint or several basis.

The number of members of the board of directors is normally selected according to the requirements of the company concerned. In Italy, small and medium-sized companies normally have a board of directors composed of three or five members; in listed companies the average is 11 members. Companies in the financial sector have a larger number of directors.

Persons disabled from their rights, bankrupts and those who have been convicted with a sentence entailing legal sanction, even temporary, from public office or are unable to exercise managerial functions, cannot be appointed directors or management board members and, if appointed, shall forfeit their office. These are known as causes of ineligibility.

Special laws provide for numerous causes of incompatibility with the office of the director: eg, civil servants, holders of government positions and members of parliament cannot sit on a board of directors. Lawyers can sit but they cannot be assigned executive or managing powers. The causes of incompatibility, separate from the causes of ineligibility cited above, mean only that the person concerned must choose between the positions; thus, the resolution appointing them is not null and void. 

In companies adopting one-tier systems, at least one third of the members of the board must hold the requirements of independence, which are:

• not having been deprived of their rights, bankrupted or convicted with a sentence entailing interdiction, even temporary, from public office or being unable to exercise managerial functions;
• not being a spouse or related to the directors of the company, the company, the relatives and those who are related by blood or marriage within the fourth degree to the directors of companies controlled by it, of companies that control it and of companies under common control; and 
• not being related to the company or to companies controlled by it or to companies that control it or companies under common control by an employment relationship or by a regular consultancy contract or by other economic relationship that may prejudice the independence, as well as, if provided by the by-laws, requirements provided for in codes of conduct drafted by trade associations or by companies managing regulated markets.

For listed companies, the members of the board of directors must be appointed on the basis of their professional profiles, independence, knowledge and skills.

The Governance Code provides that the board shall be made up of executive and non-executive directors, as well as that an adequate number of non-executive directors (in any case, not less than two) shall be independent, in the sense that they do not maintain, nor have they recently maintained, directly or indirectly, any business relationships with the listed company, or persons linked to it, of such a significance as to influence their autonomous judgement.

Furthermore, it is not possible for a director to simultaneously hold more than five directorships in listed or non-listed companies.

For listed companies, the by-laws must always provide for mechanisms appointing the board of directors that assure a balance between men and women (the "pink share"). The gender less represented must obtain at least one third of the elected positions. The same criterion is also valid for the oversight committee in the two-tier system. 

In SpAs, adopting the traditional system or the one-tier system, as well as in Srls, the shareholders’ meeting shall appoint and remove directors, using the majority principle. However, in Srls, management is usually entrusted to the quotaholders, unless otherwise provided in the company’s by-laws.

The by-laws may set specific requirements for the independence of the directors. In the case of listed companies, statutory requirements are provided for the independence of directors.

As a general rule, the directors are liable for damages arising from their breach of conflict-of-interest rules. In such cases, statutory auditors, external auditors and abstaining and absent directors can challenge the resolutions adopted by the board with a vote of directors in conflict, to the extent that the vote in conflict was essential to reach the needed quorum, and the company suffered damage as a result of the decision.

In the case of SpAs, pursuant to Article 2391 of the ICC, the directors have the duty to disclose any interest they may have, personally or on behalf of third parties, in a specific transaction, indicating the nature, terms, origin and relevance thereof to the board of directors and to the board of statutory auditors and abstaining from taking any action in conflict (or, in case of a sole director, referring the decision to the board of statutory auditors). If such action is taken, the board of directors must expressly state the reason and the benefit to the company of the transaction.

Directors of listed companies who fail to disclose conflict of interests may incur criminal liability in accordance with Article 2629-bis of the ICC. 

In the case of Srls, a court can be asked to declare contracts entered into by a director void to the extent that: the director acted in their own interest or in the interest of a third party; and the third party with which the director contracted was aware of the conflict.

Under Article 2392 of the ICC, the directors must fulfil the duties imposed upon them by law and by the by-laws with the diligence required by the nature of the appointment and by their specific competencies. In fact, directors’ specific competencies can be evaluated when determining their duties on a case-by-case basis.

The management of the company is the exclusive responsibility of the directors and their primary duty and responsibility is achieving the corporate purpose. They are jointly liable to the company for damages caused by non-compliance with such duties, except for functions vested solely in the executive committee or in one or more directors. In all cases, the directors are jointly liable if, being aware of detrimental acts, they did not do what they could have done to prevent their occurrence or to reduce their harmful consequences. Liability for acts or omissions of directors does not apply to a director who, being without fault, has had their dissent recorded without delay in the relevant corporate books and has immediately given written notice to the chairperson of the board of statutory auditors.

Moreover, directors are liable towards company creditors for non-observance of their duties concerning the preservation of the company’s assets.

The company, the shareholders/quotaholders and third parties can enforce a breach of directors’ duties and obligations, and claim damages arising out of such breaches.

In SpAs, an action for liability of the directors can be brought pursuant to a resolution of the shareholders’ meeting and may be started within five years of termination of their office. A company action may also be taken by shareholders representing at least one fifth of the capital or the percentage indicated in the by-laws, which in any event cannot be higher than one third and, in companies having recourse to the risk capital market, may be brought by shareholders representing one twentieth of the capital. An action for liability against directors may also be brought by creditors when the company’s assets prove insufficient to satisfy of their claims. Finally, individual shareholders and third parties are entitled to compensation for damages if they are directly damaged as a result of malice, fraud or negligence of the directors. In this case, the action may be brought within five years of the act that damaged the shareholder or the third party. In companies adopting the two-tier system, an action for liability against directors may be brought by the shareholders, as explained above, or by the oversight committee.

In Srls, an action for liability against directors may be brought by any quotaholder. Further, any quotaholder or third party who has been directly damaged by wilful or negligent acts of the directors is entitled to compensation for damages.

Directors may also operate so that the company incurs criminal and administrative liability according to Legislative Decree No 231/2003 (eg, false company communications, fraudulent bankruptcy, bribery, death or personal injury in lack of adoption of measures to protect safety at workplace, environmental pollution).

In addition, directors may also be considered personally criminally liable for the same crimes. 

Under Article 2389 of the ICC, directors are entitled to receive a remuneration for their activities. The directors’ fee is established under the by-laws and if it is not provided therein, it may be established at the time of their appointment by the shareholders’ meeting (in the one-tier and traditional administration system under Article 2364, paragraph 1, No 3 and Article 2389 of the ICC, respectively) or by the supervisory board (in the two-tier system unless otherwise indicated in the by-laws). 

Should the compensation not have been established (and there is no evidence that the directors have waived it), the directors may ask the court to set an appropriate amount. 

Generally speaking, the remuneration is composed of: 

• a fixed amount; 
• a variable amount relating to the achievement of specific goals; 
• special treatments when the termination occurs; and 
• benefits like the personal use of certain company assets or an insurance policy for civil liability.

Remuneration may also be represented in whole or in part by profit sharing or by the attribution of the rights to subscribe shares of the future issue at a predetermined price. 

The remuneration of directors vested with special appointments (for example, chairperson or managing directors) in compliance with the by-laws is decided by the board of directors, after having heard the board of statutory auditors.

As regards listed companies, the remuneration of directors and key management personnel shall be established in a sufficient amount to attract, retain and motivate people with the professional skills necessary to successfully manage the listed company, as well as that shall be defined in such a way as to align their interests with pursuing the priority objective of the creation of value for the shareholders in a medium to long-term timeframe.

Referred to directors with managerial powers or performing functions related to business management, as well as with regard to key management personnel, a significant part of the remuneration shall be linked to achieving specific performance objectives, possibly including non-economic objectives, identified in advance and determined in line with the guidelines contained in the general policy. The remuneration of non-executive directors shall be proportional to the commitment required from each of them, also taking into account their possible participation in one or more committees.

Listed companies must submit a document (Piano di Remunerazione) containing the directors’ remuneration policies for the approval of the shareholders’ meeting, and must establish a qualified majority for decisions on the remuneration of directors and executives.

Should the directors’ remuneration document not be approved, the company may decide to resubmit it to the shareholders’ meeting, after making the changes requested by it. Alternatively, the company may decide to continue applying the previous remuneration plan, if any, or adopt a temporary remuneration plan.

In any event, the non-approval of the directors’ compensation plan can create tension within the company. Furthermore, non-approval can have negative consequences on the company’s reputation and on investors’ confidence in it.

There are no specific obligations to make public disclosures in relation to the remuneration, fees or benefits payable to directors and officers.

There are two main sources from which a relationship between the shareholders and the company arise: the law and the by-laws.

Within the limits set out in the ICC, the shareholders, when they enter into the deed of incorporation of a company, are allowed to regulate several important aspects of their relationship with the company in the by-laws.

The by-laws, which can be amended only by way of resolution of the extraordinary shareholders’/quotaholders’ meeting before a public notary, also establish the rules applicable to the relationship of the shareholders to each other and cover issues such as the transfer of shares/quotas, granting specific rights to certain shareholders/quotaholders, and the withdrawal and exclusion from the company.

According to Article 2380-bis of the ICC, board activity is characterised by autonomy and exclusivity. The shareholders cannot, therefore, interfere with the management of the business or take formal steps to require the board to pursue a particular course of action; they can only remove the directors at a shareholders’ meeting or choose not to re-elect them when their tenure expires.

In the case of SpAs, shareholders’ meetings are duly assembled with the presence of as many shareholders as represent at least half of the company’s share capital, excluding shares without voting rights. The ordinary meeting passes resolutions by an absolute majority of the attendees unless a higher majority is required by the by-laws.

Extraordinary meetings pass resolutions with the vote in favour of as many shareholders as represent more than half the share capital of the company unless a higher majority is required by the by-laws. 

Extraordinary meetings of companies that have recourse to the risk capital market are duly assembled when as many shareholders as represent at least half of the capital or a higher percentage provided for in the by-laws are present and such a meeting passes resolutions with a vote in favour of at least two thirds of the share capital present at the meeting. If the shareholders present do not represent the proportion of capital required for a quorum, the meeting must be called again. At the second meeting, the ordinary shareholders’ meeting passes resolutions on the matters that should have been dealt with at the first meeting, regardless of the part of capital represented by shareholders in attendance, while an extraordinary meeting is duly assembled with the presence of shareholders representing more than one third of the share capital and passes resolutions with a vote in favour of at least two thirds of the share capital present at the meeting.

To participate in the meeting, if the shares are in registered form, the company shall record in the shareholders’ book those shareholders who have attended the meeting or who have deposited their shares. In any event, the by-laws may allow for attendance at the meeting through telecommunications or the expression of a vote by correspondence.

Under Article 2351 of the ICC, each share gives the right to vote. Other than as provided in special laws, the by-laws may provide for the creation of shares without voting rights, with voting rights limited to specific matters or with voting rights subordinated to the occurrence of certain conditions not merely dependent on the exercise of individual rights. The value of such shares cannot be higher in aggregate than one half of the capital.

Shares carrying multiple voting rights can be issued, but each multiple voting share can have up to a maximum of three voting rights.

In the case of Srls, the by-laws may provide that quotaholders adopt decisions through written consultation or on the basis of consent expressed in writing. The documents must be signed by the quotaholders and the subject matter of the resolution, as well as the consent to it, must be made clear.

Otherwise, the quotaholders’ meeting must be called, in the manner established in the by-laws, when required by the directors or by quotaholders representing at least one third of the capital. 

The quotaholders’ meeting must also be called in the event of decisions regarding amendments to the by-laws, decisions to enter into transactions that cause a substantial change in the corporate purpose or a significant change in the rights of the quotaholders, and decisions regarding the reduction of capital for losses.

Generally, in the case of Srls, decisions are validly adopted when the number of quotaholders present represents at least half the capital and the decisions are passed by an absolute majority of the attendees. However, decisions regarding amendments to the by-laws or decisions to enter into transactions that cause a substantial change in the corporate purpose or a considerable change in the rights of the quotaholders are adopted if quotaholders representing at least half of the capital vote in favour.

Further, if provided by the by-laws, quotaholders may attend the meeting by telephone or videoconference. 

In SpAs, an action for liability of the directors can be brought pursuant to a resolution of the shareholders’ meeting and may be started within five years of the termination of a director’s office. A company action may also be exercised by shareholders representing at least one fifth of the capital or the percentage indicated in the by-laws, which in any event cannot be greater than one third and, in companies having recourse to the risk capital market, may be brought by shareholders representing one twentieth of the capital.  

Individual shareholders and third parties are entitled to compensation for damages if they are directly damaged as a result of malice, fraud or negligence of the directors. In this case, the action may be brought within five years of the act that damaged the shareholder or the third party.  

In companies adopting the two-tier system, an action for liability against directors may be brought by the shareholders, as explained above, or by the oversight committee. 

In Srls, an action for liability against directors may be brought by each quotaholder.  

Specific obligations of disclosure are provided for by law in publicly traded companies in relation to shares and other financial instruments.

Shares 

Under Article 120 of the TUF, parties with a shareholding in an issuer of listed shares, having Italy as their home member state, in an amount greater than 3% (5% if the issuer is an SME) must notify the company and the National Commission for Companies and the Stock Exchange (CONSOB).

Under Article 117 of CONSOB Regulation No 11971/1999, parties who hold the share capital of a listed company must notify the investee company and CONSOB when: 

• the threshold of 3% is exceeded, if the company is not an SME; 
• the thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 50%, 66.6% and 90% are reached or exceeded; and 
• the investment falls below the thresholds indicated above.

Financial Instruments

Under Article 119 of CONSOB Regulation No 11971/1999, parties who, directly or through nominees, trustees or subsidiary companies, hold an investment in financial instruments, must notify the investee company and CONSOB when: 

• the thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 50% and 66.6% are reached or exceeded; and 
• the investment in financial instruments is reduced under the thresholds set forth above.

Under Article 122-bis of CONSOB Regulation No 11971/1999, anyone who holds financial instruments to which the appointment of a member of the board of directors or of the board of statutory auditors is reserved, shall inform the issuer and CONSOB if either:

• it is able to elect on its own a member of the board of directors or of the board of statutory auditors, or it ceases to be able to do so; or 
• it exceeds, with respect to the aggregate amount of financial instruments issued in the same category, the thresholds of 10%, 25%, 50% and 75%, or falls below such thresholds.

Legislative Decree No 231/2007 provided for the obligation for listed companies to identify the ultimate beneficial owners of shares with voting rights, which exceed the abovementioned thresholds.

The identity of the ultimate beneficial owners can be ascertained by listed companies by:

• the acquisition of information directly from the owners of the investments;
• the use of registers and databases: companies can use public registers and databases, such as the Companies Register or the Register of Beneficial Owners (Registro dei Titolari Effettivi), to verify the identity of the ultimate beneficial owners;
• the acquisition of information from financial intermediaries: companies can request financial intermediaries who manage shareholdings to provide the information necessary to identify the ultimate beneficial owners; and
• the analysis of accounting documents or the evaluation of cash flows.

In any event, listed companies must adopt suitable measures to guarantee the effective identification of the ultimate beneficial owners of the shareholdings, in order to prevent the risk of possible speculative transactions and to fight the risk of money laundering and terrorist financing.

Within 30 days of approval by the shareholders’/quotaholders’ meeting, companies shall file the annual financial statements (along with the reports of the directors, the auditors and the external auditor) in the Registry of Companies (Registro delle imprese) kept by the territorial Chamber of Commerce.

Under Article 154-ter of the TUF, in addition to the annual financial statements, publicly listed companies shall make available to the public (at the company's headquarters, on the website and by the other means established by CONSOB) a six-month financial report containing a simplified half-year statement, interim management report and, where applicable, six-month statements from the statutory auditor or external auditor.

Italian listed companies are required to publish a “Report on corporate governance and ownership structure” every year. This annual publication includes data on ownership and control structure, corporate boards, annual general meetings and related party transactions. Listed companies must also keep their website updated in order to comply with the shareholders’ right to information. In particular, such companies must publish on their website a notice regarding the calling of any shareholders’ meetings, a report of the relevant agenda and of the relevant records and minutes.

The information publicly available on a company from the Registry of Companies includes:

• the company's name, corporate capital, registered office, tax code and VAT numbers; 
• the directors, shareholders (including share options) and statutory auditors; 
• bonds issued (if any); 
• any transfers of going concerns, mergers or demergers; 
• enrolment in specific registers; and 
• already approved financial statements (along with the reports of the directors, the auditors and the external auditor). 

In addition to the above, it is possible to obtain from the Registry of Companies a certificate of good standing of the target, as well as copies of the by-laws, deed of incorporation, minutes of shareholders’ and board of directors’ meetings approving the financial statements, and any special powers of attorney granted.

As regards listed companies, in addition to the information registered with the Registry of Companies, CONSOB also makes other information publicly available, for example: 

• if the company’s by-laws allow the increase of voting rights; 
• if the company has issued multiple voting shares (azioni a volto multiplo);
• the investments in financial instruments and aggregate investments; 
• the extracts of shareholders’ agreements; 
• if the company has carried out operations on its own securities; 
• communications by the holding companies; and 
• other information.

The main consequences of failing to file financial statements are the following.

• Administrative fines: companies that do not file their financial statements risk incurring administrative fines, which can be very high.
• Liability of the directors: the directors of the companies can be held liable for failure to submit financial statements, and therefore can be subject to fines and be ordered to compensate for the damages caused to the company and/or its creditors.

Therefore, companies that do not file their financial statements could lose their right to certain tax breaks.

The SpAs must appoint statutory auditors and an independent auditor (either a registered accountant or an external auditing firm) when the company is required to draft consolidated financial statements or is a listed company, a bank, an insurance company or a public interest entity (PIE). Otherwise, the company has the faculty to entrust the auditing of the company’s accounts to the statutory auditors. 

As regards Srls, under Article 2477 of the ICC, a controlling body or an external auditor must be appointed if the company: 

• is obliged to draft consolidated financial statements; 
• holds the control of another company which is subject to the accounting audit; or 
• has exceeded at least one of the following limits for two consecutive financial years: 
1. total assets of EUR4 million;
2. revenues from sales and services of EUR4 million; 
3. average number of 20 employees during the financial year.

The duty to appoint a controlling/auditing body ceases if none of these conditions is exceeded for three consecutive financial years.

Therefore, if the above conditions are met, the Srls will generally have the possibility to choose between an external auditing firm and the appointment of a controlling body (whose members need, however, to be enrolled at the Registry of Auditors) entrusted also with the auditing of the company’s accounts.

The obligation to appoint an external auditor can be included in the by-laws of the company.

The directors have the exclusive responsibility for the management of the company. According to Article 2086 of the ICC, this entails the creation of an organisational, administrative and accounting structure that is appropriate to the nature and size of the business. In companies adopting the one-tier system, a controlling body must be established within the board of directors. Unless otherwise provided in the by-laws, the board of directors shall determine the number and the appointment of the members of the committee. However, the members of the committee cannot be fewer than three in companies that have recourse to the risk capital market. The committee is formed by directors having the requirements of good repute, professional experience and independence provided for in the by-laws, who are not members of the executive committee and to whom powers or specific appointments are not delegated, and who in any event do not perform functions pertaining to the management of the company or of the companies that control it or are controlled by it. At least one member of the committee must be selected from subjects registered in the Register of Accounting Auditors.