Can you say “Sarbanes-Oxley” in Italian? According to some experts, it sounds like “law 262,” though this is not an exact translation.
Passed in 2005, two years after the massive accounting scandal at Italian dairy group Parmalat, 262 requires a manager at listed companies in the country to sign off all financial communications and certify reporting practices. With a two-year grace period now over, 262 will affect the latest batch of corporate results. In most cases, the sign-off responsibility falls to CFOs, arguably increasing their authority and influence. Yet while many Italian finance chiefs do not sit on their companies’ boards, the new law makes them as liable to shareholders and creditors as board directors are, explains Giovanni Pedersoli, a partner in Linklaters’ Milan office. That may not be such a welcome development.
Thus far, Italy’s CFOs have not all resigned to open pizzerias, quips Bruno Cova at law firm Paul Hastings. But like the Sarbanes-Oxley Act, the issue is causing a stir and generating plenty of debate.
Should finance chiefs be so worried? The law is yet to be tested and Cova points out that there is “no specific law 262 penalty.”
Annalisa Rossi, a partner in the Rome office of law firm DLA Piper, draws attention to another bill currently under discussion in Italy, which would make misrepresentations in company accounts a criminal rather than an administrative offence, with a maximum jail sentence of six years. Of course, that is a much shorter spell than executives would face if they ever fell foul of Sarbanes-Oxley and the various fraud charges that go with it. But taken along with law 262, it means that life for CFOs in the bel paese is about to get a lot tougher.