On November 20, 2024, the Italian Supreme Court (Cassazione Civile, Section II) issued ruling no. 29844, clarifying the responsibilities of non-executive directors in banking institutions.
The Court ruled that the duty to “act in an informed manner,” as established by Article 2381 of the Italian Civil Code, applies to all directors, including those without executive powers. Non-executive directors must actively work to prevent, address, or mitigate corporate risks when they become—or should become—aware of them. Moreover, they are required to stay adequately informed about the company’s situation, exercising their right to access information with the diligence expected from their position and expertise.
The ruling highlights that non-executive directors cannot rely solely on reports from executive directors. They must continuously maintain a solid understanding of the banking business and, as participants in strategic decisions, play a crucial role in ensuring effective risk management across all sectors of the bank. Additionally, they must monitor the actions of executive bodies, assess management reports critically, and exercise their oversight powers when necessary.
This decision reinforces the active and accountable role of non-executive directors in the banking sector, underlining their responsibility to uphold strong corporate governance and prudent risk management.