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member must be enrolled in the professional registrars of auditors), to be appointed upon resolution of the shareholders’ meeting. The surveillance board is entitled, on one side, to supervise and control the management of the company (function that is granted in the traditional system to the board of auditors), and, on the other side, to exercise most of the functions which in the traditional system are granted to the competence of the shareholders’ meeting. Therefore, the surveillance board shall, inter alia, appoint and revoke the administrative board, determine its compensation, approve the balance sheets and exercise on behalf of the company any liability actions against the administrative board, or any of its members. As to the shareholders, the dualistic system substantially limits the extent of their power to the appointment of the surveillance board, including the resolution upon the main guidelines and the general objectives of the company’s activities and the major material amendments to the company’s by -laws or the major events regarding the structure and the term of the company (e.g., dissolution, mergers, de-mergers, change of corporate form or the company’s stock capital). Finally, as opposed to the traditional system, any S.p.A. adopting the dualistic system must be subject, without exception, to the accounting surveillance of an external auditor. Based on the above, it can be concluded that, among the three governance systems under consideration, the
dualistic system achieves the most significant separation between the competence of the beneficial owners of the company and that of its governance bodies. For these reasons, the dualistic system seems to be particularly suitable for those companies where the administration of the company is granted to independent and professional managers with no (or very little) interference from shareholders. On the other side, the dualistic system does not seem to be advisable for small- medium-sized companies, where a strong participation of shareholders in the day-to-day management of the company is generally registered. b.3) The Monistic System The monistic system does not provide for a clear distinction between an administrative body and a surveillance body with duties of control of the management of the company. In fact, both functions are conducted by the board of directors, although through different bodies established with such a board. In fact, the monistic system assigns the management of the company to the board of directors, while the supervision over such management is granted to a different corporate body named the audit committee, to be appointed by the board of directors itself, among its members. The audit committee is entrusted with all powers and duties typically assigned to the board of statutory auditors in the traditional system, such as the control of management of the company and the control of compliance with the laws and the company’s by -laws. Furthermore, as to accounting control, also in the
ILN Corporate Group – Establishing a Business Entity Series
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