In a recent judgment, the Italian Supreme Court clarified the limits to be observed by a company’s director when delegating certain powers to a third party, stating that “the director is not allowed to delegate to a third party powers that enable such party to take over the company’s management and/or the power to carry out the operations necessary for the pursuit of the company’s object, which are exclusive prerogative of the directors”. In the case at issue, a former director had retained management powers by virtue of a power of attorney, which was found as “abdicative” due to its broadness in terms of lack of (time and amount) limits.
In fact, although the delegation of powers is not precluded per se, the Court emphasised that, due to the close relationship between the shareholders’ meeting and the directors appointed by the same, the directors cannot entrust the company’s management to third parties. Thus, the delegation is legitimate only in case the directors actually retain the company’s management, i.e. when the delegated operations are not so far-reaching as to suggest that the third party is, in fact, in a position to manage or represent the company. In addition to the extent of the delegated actions, a further proxy for lawfulness of the delegation is the permanence of the directors’ power to control the third party’s actions.