Investment in Italy

3.1.3Corporate governance of listed companiesInvestment in ItalyListed companies are subject to supervision by Consob, the public authority responsible forregulating the Italian securities market in order to protect investors and guarantee transparency.The financial statements of listed companies must be audited by an independent auditingcompany, registered with the Ministry of Justice and meeting the technical standardsrequired by law.Directors must include executive and independent non-executive members and havespecific duties, the most important of which are to:• provide accurate and fair information to the public• draft the company’s offering prospectus when required by law• provide disclosure in the event of extraordinary corporate transactions• disclose price-sensitive information pursuant to the law• draft the information documents and comply with all other formalities involved in publicofferings of shares, takeover bids and public exchange offers• disclose any information regarding transactions carried out by the managers and otherparties having access to price-sensitive information.Consob checks this information and may inspect the companies and ask for clarifications andfurther information from their management. Consob can also issue penalties to companiesthat do not provide the public with adequate information.3.1.4BranchesIn accordance with article 2508 of the Italian Civil Code, foreign companies have the right toestablish one or more branches in Italy.A branch is an extension of the foreign entity and depends - both administratively andeconomically - on its headquarters. It uses the same name and legal form as the foreigncompany: it does not have its own internal governing body but is managed directly by thegoverning body of the foreign company, which appoints one or more permanent legalrepresentatives (preposto/i), entrusted with the powers to manage and represent the branchbefore third parties.It does not have its own capital and is not required to draw up annual financial statements: acopy of the financial statements of the headquarters must be filed at the Trade Register (inthe original language, accompanied by a sworn Italian translation).An annual report is required only in order to prepare the Italian income tax return. To facilitaterecord-keeping and the preparation of its annual report, an Italian branch usually keeps theaccounting books required by article 2214 of the Italian Civil Code, in particular the generalledger (libro giornale) and the inventory book (libro inventari).Contracts concluded by the branch through its legal representative are binding upon theforeign company and any liabilities for the breaching of the contractual obligations areattributable directly to the directors of the latter.© 2012 KPMG S.p.A., KPMG Advisory S.p.A., KPMG Fides Servizi di Amministrazione S.p.A., KPMG Audit S.p.A., Italian limited liability share capital companies, and Studio Associato Consulenza legale e tributaria, anItalian professional partnership, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.27