In brief. Foreign companies are not beyond the reach of Legislative Decree no. 231 of 8 June 2001 (D.Lgs 231/2001). Italian case law holds that an entity incorporated abroad can be held administratively liable in Italy where a predicate offence is committed on Italian territory in the entity’s interest or to its advantage. The fact that the company has its registered seat elsewhere, or that it has not adopted an Italian-style organisational model (MOG), does not exclude liability. For multinationals and foreign-owned groups operating in Italy, the practical question is how to manage that exposure and how to defend an entity once an investigation begins.

Does 231 apply to foreign entities?

D.Lgs 231/2001 establishes the administrative liability of entities for offences committed in their interest or to their advantage by senior persons (apicali) or by persons under their direction (sottoposti). The decree’s scope is defined principally by where the predicate offence is committed, in line with the territoriality principle of the Italian Criminal Code (art. 6 c.p., under which an offence is deemed committed in Italy if the conduct or its result occurs there).

The settled position in Italian case law is that:

  • a foreign entity can be prosecuted in Italy when the predicate offence is committed, in whole or in part, on Italian territory in its interest or to its advantage;
  • it is no defence that the entity is incorporated abroad, that its decision-making centre is abroad, or that the law of its home State has no equivalent of 231 liability;
  • equally, it is no defence that the foreign entity was unaware of, or had no obligation under its own law to adopt, an Italian organisational model.

The first Court of Cassation ruling on the point (Cass. crim., Sixth Section, judgment no. 11626, filed 7 April 2020, concerning a foreign company charged in connection with bribery committed in Italy) confirmed that a foreign entity is subject to D.Lgs 231/2001 where the predicate offence is committed on Italian territory, regardless of its registered seat, and even if its home legal system has no comparable rules on organisational models.

A distinct rule covers the opposite situation: under art. 4 of D.Lgs 231/2001, entities with their main seat in Italy may be liable for offences committed abroad, in the cases and under the conditions of artt. 7-10 of the Criminal Code, provided the State where the offence was committed does not prosecute them.

When exposure arises

A foreign company most commonly comes within range of 231 through one of the following structures:

  • A branch or permanent establishment in Italy through which business is conducted and through which an offence is committed.
  • An Italian subsidiary — the subsidiary is a separate legal entity; according to case law the parent can be drawn in only where a person acting for the parent contributed to the offence and the parent itself obtained a concrete and direct interest or advantage (a generic “group interest” is not enough).
  • Project or contract activity in Italy — for example public procurement, construction, energy or distribution operations carried out on Italian soil.
  • Agents and intermediaries acting in Italy whose conduct (notably corruption) benefits the foreign principal.

The recurring trigger is that a person who functions as an apicale or sottoposto of the foreign entity commits a predicate offence connected to the entity’s Italian activity, and the entity derives an interest or advantage from it.

The predicate offences

231 liability is never free-standing: it attaches only to a closed and expanding list of predicate offences (reati presupposto). For foreign companies, the categories most often in play are:

  • Corruption and offences against the public administration — bribery of public officials, undue inducement, trafficking in unlawful influence and — where EU financial interests are affected — embezzlement, frequently arising in public contracts and licensing.
  • Corporate offences (reati societari) — false corporate communications and related accounting offences.
  • Money laundering, self-laundering and receiving — under the provisions added to the 231 catalogue.
  • Market abuse — insider dealing and market manipulation.
  • Health and safety offences — manslaughter and serious injury resulting from breaches of workplace safety rules, a category of particular relevance to industrial and construction operations.
  • Environmental offences and tax offences, both progressively incorporated into the catalogue.

Because the catalogue is periodically extended by the legislator, a risk assessment performed at one moment must be kept under review.

Sanctions and cross-border consequences

The sanctions a foreign entity faces are the same as those applicable to Italian entities under D.Lgs 231/2001:

  • Pecuniary sanctions calculated in quote (units), scaled to the gravity of the offence and the entity’s economic capacity;
  • Disqualification measures (sanzioni interdittive) — such as a ban on contracting with the public administration, suspension or revocation of authorisations and licences, and prohibition on advertising goods or services — which can be imposed even as a precautionary measure during the investigation;
  • Confiscation of the price or profit of the offence; and
  • Publication of the judgment.

For a multinational, disqualification from public contracting in Italy and the reputational impact of a published judgment frequently outweigh the financial penalty, and may have knock-on effects on group compliance certifications and on dealings with regulators in other jurisdictions.

Defence strategy for foreign companies

Defence of a foreign entity proceeds on several fronts:

  • Jurisdiction and attribution. Testing whether the predicate offence was truly committed in Italy, whether the person who acted qualifies as an apicale or sottoposto of the foreign entity, and whether the entity derived an interest or advantage.
  • The interest/advantage requirement. Demonstrating that the offence was committed in the exclusive interest of the individual or of a third party, which excludes the entity’s liability.
  • The model defence. While a foreign company may not have an Italian MOG, an effective group compliance programme can be relevant; ILA also advises on adopting a properly localised Italian model to mitigate future and ongoing exposure.
  • Precautionary defence. Opposing disqualification measures at the earliest stage, where the most immediate commercial damage occurs.
  • Coordination with foreign counsel. Aligning the Italian defence with parallel proceedings, internal investigations and regulatory engagement in the entity’s home jurisdiction.

ILA acts for foreign-incorporated companies and international groups facing 231 proceedings in Italy, combining Italian criminal-defence expertise with cross-border coordination. For the underlying framework, see our pillar on corporate liability under D.Lgs 231/2001.

FAQ

Can a company incorporated abroad be prosecuted under 231 in Italy? Yes. Italian case law holds that a foreign entity can face 231 liability where a predicate offence is committed on Italian territory in its interest or to its advantage. Foreign incorporation and the absence of an equivalent law abroad do not exclude liability.

Is the lack of an Italian organisational model a defence for a foreign company? No. The absence of an Italian MOG does not exempt a foreign entity, and without an adequate model the statutory defence is simply unavailable. An effective group compliance programme can be relevant to the defence, but a properly localised Italian model is the safer course for entities operating in Italy.

What sanctions can a foreign company face? The same as Italian entities: pecuniary sanctions in quote, disqualification measures (including bans on public contracting, imposable even during the investigation), confiscation of profit, and publication of the judgment. For multinationals the disqualification and reputational effects are often the most serious.

If your company is incorporated outside Italy and is exposed to, or already facing, 231 proceedings, contact ILA. See our corporate liability 231 pillar, write to us via the Contact page, or read more about the firm.