Early termination of the office of sole auditor in LLC: the appointment of an alternate auditor is possible even in the absence of a specific provision in the Articles of Association
With Case no. 3/2021, Assonime returns to the debated issue of the compulsoriness or possibility of appointing an alternate auditor in case of a monocratic control body of a Limited Liability Company, admitting that it is possible “also at the time of the assignment of the auditing function, to appoint, in addition to the effective auditor, the alternate auditor, even in the absence of a specific provision in the Articles of Association”.
First of all, it should be noted that the structure of controls in a Limited Liability Company is governed by Article 2477 of the Italian Civil Code, according to which the shareholders are allowed to appoint a single auditor, unless the deed of incorporation expressly provides for the appointment of a collegial body; in the latter case, the applicable rules will be those laid down for a Joint-Stock Company. (Article 2477, paragraph 4 of the Italian Civil Code).
Despite the clear wording of art. 2477, paragraph 4 of the Civil Code, it is worth mentioning the different position taken by some doctrine who have excluded in the past the possibility of appointing an alternate auditor, relying on the mere textual data provided by art. 2477, paragraph 1 of the Civil Code, according to which “the control body is made up of a single effective member”. Consequently, based on this doctrine, when the circumstances occur that in a Joint-Stock Company would determine the replacement of the substitute auditor, a Limited Liability Company will necessarily have to convene the shareholders’ meeting to provide for the replacement of the monocratic organ.
This reconstruction would also be supported by the need to simplify the structures and costs of Limited Liability Companies, as well as the typical nature of the publicity system provided for the Companies’ Register, which does not allow the registration of acts not prescribed by law pursuant to article 2188 of the Italian Civil Code.
This approach was also accepted by the Ministry of Economic Development (MISE) in the Interpretative Note No. 0180772 of 28 August 2012 in which it was argued that it is not possible to obtain the registration of the appointment of the alternate auditor in the Companies’ Register and that the appointment should therefore be considered not only unnecessary but even precluded.
On closer inspection, however, this interpretation was expressed before the redrafting of Article 2477 of the Civil Code, which now explicitly refers to the rules laid down for the board of statutory auditors of a Joint-Stock Company also for the single-member auditing body.
It has also been pointed out that the National Council of chartered accountants (CNDCEC), in the document “Guidelines for the single statutory auditor” dated December 2015, as well as in the more recent “Rules of conduct for the board of statutory auditors of unlisted companies” dated 21 January 2021, recognises the legitimate possibility of include a specific provision for the appointment of the alternate auditor in the Articles of Association, since such a choice is an expression of shareholder autonomy and also guarantees the continuity of the performance of the supervisory function.
In the same tenor as the above, the Judge of the Companies’ Register at the Court of Milan has recently ruled in its judgment dated March 11, 2019 that the registration of the resolution for the appointment of the alternate auditor in the Companies’ Register is in compliance with the general principle of continuity of the control body, which is expressed by the rules set out in Article 2397 of the Italian Civil Code, which provides for the mandatory appointment of statutory auditors and alternate auditors in Joint-Stock Company.
This last ruling was the occasion for Assonime to change its position on the matter with Case No. 3/2021, in which the figure of the alternate auditor was allowed through an overall reinterpretation of the mechanisms for replacing the monocratic control body, combining the wide autonomy in terms of organisation granted to the shareholders of a Limited Liability Company with profiles of simplification of the corporate structure.
The actual turning point of the document in question consists in the acceptance of the thesis according to which the general rule on the matter remains the designation of a statutory auditor as the sole member of the supervisory body, without the presence of an alternate auditor. However, this general rule is “supplementary” in the sense that it will apply only if the shareholders have not provided for the appointment of the alternate auditor in the Articles of Association or in the shareholders’ meeting called to appoint the auditor.
 Assonime is the association of Italian joint stock companies established with the aim of analysing issues directly and indirectly related to the interests and the development of the Italian economy. In this context, the association in particular contributes to the implementation of industrial, commercial, administrative and fiscal legislation, with an emphasis on companies and the evolution of their productive activities.
 In this view: massima no. 123/2011 and no. 124/2012 of the Notary Council of Milan; Assonime, Circolare no. 6/2012; more prudent Study 113-2012/I of the National Council of Notaries.