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The Supervisory Body, provided for by Model 231

The Supervisory Body (SB), provided for by Model 231: its features, composition and functions.

Table of Contents

As we have previously seen in our guide on Model 231, the Model is a non-compulsory management protocol that all companies are advised to implement in their policy to hedge against risks and avoid possible repercussions in the event of litigation.

Model 231 also involves the appointment of a Supervisory Body.

In this article, we will delve into this new matter, describing its features, functions and composition.

Supervisory Body 231: what is it and what does it mean?

The Supervisory Body, or in its Italian acronym OdV (which stands for Organismo di Vigilanza), is an autonomous, independent and highly qualified body that companies that have integrated Model 231 must appoint.

Who appoints the members of the Supervisory Body?

According to article 6, comma 1, paragraph A of Legislative Decree n. 231/2001, the Board of Directors is in charge of appointing, modifying, as well as revoking the Supervisory Board.

After appointing the members who will make up the Supervisory Board, the term of appointment is for an indefinite period for internal members, while it will be for a fixed period for external professionals. Generally, they remain in office for three financial years.

How is the Supervisory Body composed?

There are no specific legislative prescriptions concerning the formation of the Supervisory Body. Therefore, it can be set up as a single- or multi-subject body.

Should it be the case, it will be a collegiate body made up of professionals from different fields. There will be external professionals, who could give authority and independence to the Company itself, as well as internal subjects, who could balance independence and ensure continuity of action.

The choice between these two different compositions depends on the size, kind of activity and level of organization of the company.

How many members are in the Supervisory Body?

Generally, it is possible to distinguish the following compositions:

  • In large and medium-sized companies, the Supervisory Body is made up of three members. They can be three external figures or two external professionals and an internal subject;
  • In small companies, usually in unlisted companies (or medium-sized companies with low 231-risk), the SB is monocratic, e.g. it is represented only by an external professional.
  • In smaller companies, the role of the SB could be carried out by the management body itself (Sole Director or Board of Directors as a whole). This is a solution accepted by law, but managers usually prefer to delegate this role to other professionals.

Who can be part of the Supervisory Body?

The members of SB must have specific characteristics.

Indeed, the requirements of independence, autonomy, continuity of action and professionalism must be guaranteed, according to case law and to the guidelines provided by Italian industry association Confindustria.

Furthermore, the internal components shall not be in a conflict of interest. For example, persons in charge of the HSE (Health, Safety and Environment) function cannot be part of the body as they should be among the main assessment subjects.

Besides the requirements mentioned above, the external components cannot carry out roles for long periods within the same Company, because this could undermine the criterion of autonomy.

What requirements should the SB comply with?

At this point, it is necessary to delve into the expected characteristics of the components:

Autonomy and independence

These are necessary to avoid any type of interference between the controlling subject and the controlled subject. Economic and personal interference could undermine the objectivity, and the serenity of judgements during audits.

It is therefore necessary to determine causes of ineligibility and disqualification from the role to prevent any member of the Supervisory Board from being conditioned and from being convicted of an offence.

Continuity of action

The constant exercise of control and supervisory powers over the activities deemed sensitive is imperative. Such activities are intended as the operational areas where there is a risk of offence being committed. Also the monitoring of Model 231 must change, according to the corporate and regulatory scenario.

The members of the Body must receive constant and timely updates on the company areas most exposed to risk. In order to ensure the performance of these tasks, a scheduling of the activities could be envisaged, including a periodic evaluation, also to coordinate activities with top management.

Moreover, it is advisable to check the financial resources available to the Body, as they are essential to perform the tasks in the best possible way.

Professionalism

Besides an appropriate knowledge of corporate organization and of the main procedures, the members of the SB should have two types of competences:

  • legal-criminal;
  • technical-inspection skills, to analyse company systems.

Knowledge of Legislative Decree n. 231/2001 is essential: the members of the Supervisory Board must be qualified with experience in the “231” field.

What are the tasks of the Supervisory Body?

The SB has two specific roles:

  1. The effective implementation of Model 231 by its recipients (e.g. if the identified procedures are being correctly implemented as well as monitoring the spread of knowledge and understanding of the Model among its recipients).
  1. The suitability of Model 231 over time to ensure that it is always effective. Therefore, the SB can propose adjustments and updates in response to changes in the organization or in its activities, in the regulatory framework of reference, or if violations have occurred. It is also crucial to provide updates on the functioning of the Model.

The SB plays two crucial roles in the implementation of the protocol provided by Model 231. Indeed, the SB is the driving force of the model because it must control the actual implementation, to ensure that it does not remain at theoretical level.

Moreover, its activity is crucial in order to trace any gaps that may appear during its adoption and to improve it.

What are the flows of information involving the SB?

As seen above, the SB must monitor the implementation of the Model. However, in order to do so, members should be always updated and should have free access to corporate activities, without prior approval.

In this regard, well-structured flows of information must be guaranteed. Thanks to these latter, the SB may gain awareness about affairs in which the Company is involved. This includes not only information of an economic-financial nature, but also concerning production and commercial activities, advances in technology and the issuance of regulations that could have an impact on the company’s activities.

The importance of having access to these types of information is highlighted also in Legislative Decree n. 231/2001. Indeed, article 6, (2), (D) provides for the obligation to inform the body in charge of monitoring the functioning and compliance with the Model.  

Hence, periodic flows of information must be sent to the officers concerned to ensure the proper functioning of the Model. In particular, the Administrative Body must inform the Supervisory Board of any resolutions that may modify the Model’s functionality, for instance in the organisational structure. On the other hand, the control bodies must periodically provide information on the status of the internal control system under their responsibility.

Finally, it is recommended that the modalities for creating a regular flow of information on the structure be laid down in the corporate procedure, to regulate its timing, content and transmission to the control body.

Who is allowed to make reports to SB?

A report means any information concerning alleged findings, irregularities, violations, reprehensible conduct and facts or, in any case, any practice that does not comply with the provisions of the Code of Ethics and/or the Organisation, Management and Control Model.

Reports may come from various sources, both internal and external to the structure, and may also be made anonymously. They may concern the possible commission of offences or violations of the Model (even potential, not actual). However, the whistleblower must be protected from retaliation, so it is important to put in place a system to protect anonymity.

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Regulatory Framework

Legislative Decree n. 231/2001

Reference (Italian only)

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