By implementing Directive 2014/95/EU, Legislative Decree n. 254 of 30 December 2016 has introduced the obligation for specific companies and large-scale groups of undertakings to disclose – with reference to financial years starting from 1 January 2017 - certain information of non-financial nature (i.e. regarding environmental or social aspects or relating to employee matters, etc.). In particular, said legislation shall apply to:

a) public-interest entities (as defined in article 16 of Legislative Decree n. 39/2010; i.e. issuers of transferable securities listed in Italy and in EU, banks, insurance companies, etc.);

b) public-interest entities which are parent companies of large-scale groups;

c) other entities, different from public-interest entities, intending to provide information of non-financial nature on a voluntary basis.

According to article 2 of Legislative Decree 254/2016 public-interest entities and groups of companies are under the obligation to prepare the “individual statement of non-financial nature” and the “consolidated statement of non financial statement” respectively, whenever during the relevant financial year they have employed, on average, more than five hundred workers, and, by the closing date of the financial statements have exceeded at least one of the following thresholds:

a) Balance sheet total: € 20.000.000;

b) Total net revenues from sales and services: € 40.000.000.

Groups of companies which match the requirements above are defined as “large scale groups”.

1. Content of the statement of non-financial nature

Pursuant to Legislative Decree 254/2016 information of non-financial nature can be provided either on an individual basis or on a consolidated basis:

1.1 Individual information of non- financial nature

Article 3 sets out the essential requirements of the individual information of non-financial nature, to the extent necessary to ensure correct information on the company’s activity, on its business performance and on the impact of the same (as regards environment, social, employees' activities, respect for human rights and active and passive anticorruption policy). In particular, the information pursuant to article 3 first paragraph of Legislative Decree 254/2016 shall apply to the following areas:

i. management and organization of the company’s activity (also with reference to Legislative Decree 231/2001);

ii. the company’s policies in the non-financial sector;

iii. main risks connected to the company’s activities and to its products, services, and commercial relations.

With reference to the above, the statement shall provide at least the following information:

a) use of energy resources, with a distinction being made between those produced by renewable and nonrenewable energy, and the use of water resources;

b) greenhouse gas emissions and polluting emissions in the atmosphere;

c) impact on environment, health and safety, or any other relevant risk factors which may have an impact on environment and health;

d) social aspects in relation to the management of employees, including actions to ensure gender equality and the modality by which the dialogue with social partners is carried out;

e) respect for human rights, measures adopted to prevent any breach thereof, and also actions implemented by the company to avoid any discriminatory action;

f) active and passive anticorruption policy, indicating the instruments adopted for such purpose.

Such information shall be given by the company for comparison with the information provided in previous years, with the exception of the first application of the decree where public-interest entities may provide a simplified comparison with previous years.

The directors of the public interest entities shall be held liable for the correct preparation and publication of the statement of non-financial nature pursuant to Legislative Decree 2016 n. 254.

The controlling body instead monitors the company's compliance with the provisions outlined above and reports to the annual General Meeting. Finally, the subject in charge of auditing the financial statements verifies that the directors have prepared the statement of non-financial nature and issues an ad hoc report whereby it declares whether the information provided is in compliance with the decree.

1.2 Consolidated statement of non-financial nature

Article 4 provides that the information pursuant to article 3 shall apply to large-scale groups (as long as the parent company has fulfilled the requirements laid down in article 2). Consolidated information of nonfinancial nature shall include both the controlling and controlled companies' data.

2. Publicity formalities and penalties

In accordance with art. 5 of the Decree, the individual statement of non-financial nature and the consolidated statement of non-financial nature may be part of:

a) the Management Report referred to under art 2428 of the civil code;

b) a separate report to be filed for disclosure by directors with the Register of Companies, along with the management report.

Failure of directors to file the individual or consolidated statement of non-financial nature shall entail the application of a fine from € 20.000 to € 100.000. Likewise, the same fine shall apply to those members of the controlling board who, in breach of their obligation to exercise supervision, failed to report the non-compliance with the provisions of the Decree as regards individual or consolidated statements at the shareholders meeting. In the event the individual or consolidated statement contains material information of an untrue nature, and unless the act constitutes an offence, both directors and the members of the controlling board may be liable to a fine from € 50.000 to € 150.000.

3. Cases of exemptions and equivalence

The Legislative Decree referred to above also provides for certain cases of omissions and exemptions from the submission of the mentioned statement. The company, including any subsidiary thereof, is exempted from this obligation if it is included in the consolidated statement of non-financial nature submitted by:

a) the parent company required to fulfil the said obligation, or else

b) the parent company of a different EU member State required to prepare consolidated financial statements.

4. Amendments to Legislative Decree n. 58 of 24 February 1998

Finally, it should be noted that in Italy the introduction of Legislative Decree 254/2016 partially amends art. 123 bis of the Consolidated Law on Finance and introduces new reference standards as concerns the Management Report to be prepared by issuers of transferable securities.